News Life and Health25 Jan 2023

Australia:Financial retirement plans change in last 2 years of turmoil

| 25 Jan 2023

With turnover in the workforce and changing patterns of work in a number of industries, a global retirement survey for State Street Global Advisors asked respondents whether they have changed their thinking on when, and how, they might retire.

Australia stands out in the global comparison with 34% of respondents indicating a changed outlook compared to 25% in the sample from US, UK and Ireland. 

More Australians reported a short-term increase in savings both within superannuation and in other savings and investments than others surveyed. In 2020, there was a muted, but still noticeable savings response to COVID. However, in 2022, the increased rate of short-term saving was more pronounced. 

The other findings of the Global Retirement Reality Report in relation to Australia include: 

  • A continuing confidence deficit on readiness for retirement, despite reforms 

  • Australians about to retire, or on low incomes, the least confident 

  • Government and industry fall short of giving Australians confidence in the system 

  • Inflation, mortgage and rent costs impact sentiment most 

  • Women are far less optimistic than men 

Despite the complexity of the Australian retirement system, 59% of respondents nominated themselves as having primary responsibility for making sure they had an adequate income in retirement.   

Around 40% of Australian respondents have little confidence in their preparedness for, or timing of, their retirement. The proportion has changed little from 2018 to 2022 despite system changes.   

This lack of confidence is particularly evident among those on lower incomes and those closest to retirement. There is clearly still much work to be done, by both industry and government, in simplifying, explaining and confidence  building in the national retirement system. 

Inflation topped the list of factors that most negatively affected retirement confidence in the survey, both for Australia (65% included it in their top 3) and the rest of the world (70%). With an emerging economic slowdown and rising interest rates, respondents were also concerned about mortgage or rent costs (35% in Australia), and about being able to continue to find spare funds for retirement (29%). 

When Australian respondents were asked about their biggest concern when planning their retirement finances, 31% selected “outliving savings”. As a side note, only 8% identified “Not leaving a bequest” as their biggest financial planning concern. 

Women are far less optimistic they will be financially prepared for retirement (18% vs 38% for men) and are less confident that they will be able to retire when they want to (17% for women vs. 38% for men). 

State Street Global Advisors commissioned global analytics firm YouGov to conduct an online survey across four countries, representing a range of retirement systems. The countries are Australia, Ireland, the UK, and the US. The survey, which has a sample size of 618 in Australia and 3,553 globally was conducted between 20 July and 22 August 2022. 


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