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Retirement fears on the rise; Australians expect $200k shortfall in retirement savings
Super and retirement
28 September 2022
  • Almost half of Australian workers don’t know how much they will have or need at retirement
  • Women significantly more concerned about retirement than men
  • Two in three aged over 65 are concerned about having too much debt
  • More than one in five don’t believe they’ll achieve their desired standard of living in retirement with cost-of-living pressures increasing concerns

New AMP Financial Wellness research shows that a growing portion of Australian workers are worried they won’t have enough savings for retirement, with a $200,000 gap between how much they expect to retire with and what they think they will need. Most expect to retire with around $400,000 in their nest eggs, but believe they’ll need closer to $600,000.

Concerns about retirement have escalated, with those worried they won’t have enough to retire increasing to three in five Australians, up from two in five in 2020. Over the same two-year period, the number of people who believe they’ll need to work longer has risen by more than 10 per cent, while one in five don’t believe they’ll achieve their desired standard of living in retirement.

Who is most worried about retirement?

Women are significantly more concerned than men across the key measures of retirement concerns: not having enough, working longer, not being able to maintain the desired retirement lifestyle. 70 per cent of women are concerned they won’t have enough to retire, compared with 56 per cent of men. This reflects a range of factors, including smaller super balances, living longer and their greater likelihood to be managing care for older relatives. Single parents and those working in hospitality, health care and social assistance are also most worried about retirement

Cost of living pressures

Recent economic trends, including higher living costs, rising inflation and volatile investment markets, are now dominating people’s thinking about retirement. Almost half of women and half of the general population aged 50-59 are concerned about how higher costs will affect their retirement lifestyle. More than three in five Australians would work for longer to avoid a lifestyle downgrade once they finish work, with only one in three happy to re-adjust their lifestyle expectations.

Taking action

While close to half of the Australian workforce doesn’t know how much they will have saved for retirement and how much they’ll need in retirement, encouragingly, the number of people starting to think about their retirement plans has doubled from two years ago. While those who have no specific retirement goal has dropped from nearly 60 per cent to just around 40 per cent. The key goals identified, include paying off the mortgage and saving more super.

Ben Hillier, AMP’s General Manager Retirement Solutions, said:

The research shows that millions of Australians are fearful they will not have enough savings for their retirement.

Heightened by increasing cost of living pressures, this fear of running out stems from a basic lack of understanding – an awareness gap – of their finances and the retirement system. Many pre-retirees also feel like they’ve left their retirement planning too late.

Consequently, many of us under spend in retirement, passing away with as much as 90 per cent of our super savings untouched, according to Treasury’s Retirement Income Review.

The upshot is millions of Australians are unnecessarily compromising quality of life in later years.

While it’s encouraging that more Australian workers are now thinking about their retirement plans – double the number two years ago – this still only represents a third of the population.

Our collective challenge is to increase this number, but critically, also turn thoughts into actions.

The good news is that information and support is readily available and simple steps can help Australians feel more comfortable and confident about retirement. 

And with the Government’s Retirement Income Covenant, the superannuation industry is more focused than ever on helping members retire well through better products and services. The Quality of Advice Review should also lead to more affordable and accessible financial advice.

The key takeaway from this research is for all Australians is to engage more with their retirement planning, and access resources and help – it’s never too early, or too late.

Steps to feel more in control of retirement:

  1. Find your bearings: Start by clarifying where you are financially, including your current and projected superannuation balance at retirement (provided by some super funds), house value, any other investments and debt.
  2. Set goals: Take the time to establish what lifestyle you are hoping for in retirement. Access resources such as ASFA’s Retirement Standard to help understand what will be broadly achievable which your savings and how long you may need to work.
  3. Get help from the experts: Retirement can be a complex transition so take advantage of trusted online resources to educate yourself. If you need further assistance speak to your superannuation fund or a financial adviser.

For more tips and information about retirement visit AMP’s Retirement Hub

About the research

These findings form part of AMP’s biennial Financial Wellness research, which has been conducted since 2014. AMP surveys the Australian working population to measure and provide a financial wellness reading on the population. How they “think” and “feel” when it comes to money. The intent is to help provide employers, government and financial services professionals with a deep understanding of the impact poor financial wellness has on individuals, productivity, society and the economy. Data from more than 2,000 respondents was collected between mid and late June 2022. Data was post-weighted based on ABS statistics: gender, age, location, working status, and industry.