Almost a third of younger Australians expect to retire by their mid 50s, a study has
found, but they may not realise just how much they will need to save for life after the work.
New research indicates many young Australians are unrealistic about the amount of time they will need to spend in the workforce to retire comfortably.
Among Australians aged 16-34, almost one third – 31 per cent – believe they will be able to retire before they turn 55, according to polling carried out for one of Australia’s largest superannuation funds, Aware Super.
A similar proportion, however, have unrealistic expectations about the amount of savings they will need for a comfortable retirement, the research shows.
It found 29 per cent expect they will need savings of less than $500,000 for a comfortable retirement while another 8 per cent don’t know how much they will need.
According to the fund, the average Australian needs $500,000 to sustain a comfortable retirement as a single person at age 67, while the average couple needs $600,000. This suggests there is a mismatch between retirement aspirations of younger people and the reality.
Aware Super’s research also highlighted that while many younger people aspire to retire early, a substantial proportion – 45 per cent – don’t feel the need to check their superannuation accounts regularly.
Despite this, 41 per cent of those surveyed were confident they would have enough funds to retire comfortably.
Peter Hogg, Aware Super’s Head of Advice, Experiences and Enhancements, said the results were concerning.
“While it’s heartening that many young Australians aspire be in a position to retire early, we’re yet to see that reflected in the way young people interact with their super even though it can be the bedrock of a comfortable retirement,” Mr Hogg said.
The research found 41 per cent of younger Australians have never made a voluntary contribution to their super. According to the fund, people who make additional super contributions of $100 per month could add an extra $54,000 to their account balances in 35 years.
“For younger Australians wanting to maximise their superannuation savings, it really is never too early to actively engage with your super,” Mr Hogg said.
The fund commissioned the research to understand the retirement aspirations of Australians and the effect of the cost-of- living crisis and current economic climate on their goals and behaviour with regard to their retirement savings. Around 3500 Australians aged 16 and older with super or pension accounts were surveyed.
Mr Hogg said the research found that while Australians were concerned about the economic outlook, “present finances are more of a focus than future investments”.
“Superannuation is the largest investment portfolio most people are likely to have in their lifetime, but Australians at all life stages are potentially not as actively engaged in their super in light of the rising cost-of-living crisis,” he said.
“With the current economic climate, it’s easy for super to slip from your radar, but that’s probably more of a reason to give it a little attention. A small investment now can have profound effects on how much you love your retirement.”
The vast majority of those surveyed said they were concerned or extremely concerned with rising living costs and inflation, while younger people were more concerned than those aged 55 and older about current interest rates.
Those aged 35-54 were least optimistic about having enough savings for a comfortable retirement. About two in every five people – 41 per cent – in this age group were unconfident or extremely unconfident of having enough to retire comfortably, compared with 35 per cent or less among younger and older demographics.
Following the research findings, Aware Super has published a guide to help Australians get a better handle on their super.
Called the Super Helpful Guide, it provides support and general advice to help Australians “feel more secure, supported and educated to take control of their finances, boost their super and meet their goals for the future”, the fund says.
It is online at www.aware.com.au/member/what-we-offer/super-helpful
Supplied by Aware Super Pty Ltd, Trustee of Aware Super. This is general information only. Before taking any action, please consider your own circumstances and consider getting advice to make sure it is appropriate for you. Please also look at the relevant Product Disclosure Statement.