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Australians face 12.5 year ‘Super Shortage’
Super and retirement
25 July 2018

New research from AMP has revealed a huge disconnect between how much Aussies believe they need for a happy retirement and what they actually need. According to AMP’s ‘Super Shortage’ research, for Australians to live the retirement lifestyle they aspire to from 65, their savings will last just five years. With the average life expectancy of Australians being 82.5 years old, this creates a super shortage of 12.5 years.

AMP financial advisor, Dianne Charman, said the findings are worrying as they reveal a big gap between expectation and reality, with Australians currently saving much less than what they need to live out their expected lifestyle in retirement.

Dianne said, “Most of us want to retire early and we want to be comfortable. However, with life expectancy continuing to rise, we are potentially leaving ourselves short of cash in our retirement years. The research suggests many Australians are facing the prospect of having to push out their retirement plans by at least 10 years.

“The reality is that today we need to make our earnings from 40 to 50 years in the workforce, extend across 80 to 90 years of living.”

Unsurprisingly, the research found the super shortage for Australians who retire at 65 years old is greater for women (14 years) than men (12 years). However, women clearly understand they might be left short when they hit retirement age, with 71 percent saying they are worried about having enough money to retire, compared with only 50 percent of men. 

Dianne said factors such as the fact that women tend to live longer than men and have time out of the workforce made it even more essential that they accumulate enough super to last through retirement.

Other interesting findings include:

  • Australians that are in a relationship have a greater super shortage (14 years) versus those that are single (11 years).
  • With a super shortage of 13.6 years, 35 to 44 year olds are the age group most likely to leave themselves short of cash in retirement if they retire at 65.
  • Generation Y is most concerned about money for retirement. 81 percent of 25 to 34 year olds are worried about having enough money to retire comfortably. This might be why it is the group that has the lowest super shortage (12.1 years) if they retire at 65 years old.  

Dianne concluded, “It’s important to think about your retirement goals and whether your super contributions will fund the retirement you want early on in life. Planning early will go a long way towards bridging the super shortage between the retirement we want and the one facing us.

AMP is looking to help Australians better understand their potential Super Shortage, to be able to proactively plan for the future. AMP’s retirement simulator can help you to work out what your annual retirement income might be, how long your money may last and what you can do to maintain your lifestyle when you retire. For Australians, this insight provides a useful tool to help meet their financial goals in retirement.