(Not so) great expectations…how Australians are approaching retirement planning

Recent research¹ reveals a concerning trend in retirement confidence.

When it comes to retirement, things are going south. The research highlights Australians’ confidence in the quality of their life after work is ebbing away.

• We expect to have less saved
• More of us think we’ll have a financially difficult retirement
• We’re less confident we’ll have enough to enjoy the retirement we hope for.

Working Australians are particularly worried about not having enough money, having to work later than expected and the rising cost of living, with almost one in two (49%) 50-59 year-olds extremely concerned about inflation.

Retirement expectations in numbers

• Average expected age of retirement – 65.4
• Total expected savings - $400,000
• Australians expecting a comfortable or lavish retirement – 41%

And things are getting worse. An increasing number of Australians (16%) are fearing a financially difficult retirement – up from 11% in the previous report two years ago. Worries are particularly acute the closer you get to retirement, with 27% of 55-59 year-olds expressing concerns. And women in particular lack confidence.

• Almost a third (27%) of women are not at all confident they’ll achieve their desired standard of living.
• And women are significantly more concerned (63%) than men (44%) they won’t have enough to live on.

On the flip side, the number of Australians expecting a comfortable retirement has fallen from 46% to 38% since 2020.
 

Top 3 concerns about retirement

The report reveals many working Australians are worried they’ll be in financial strife when they retire. They are most concerned about:

1. Not having enough money to retire (63%)
2. Having to work longer than expected (50%)
3. Not knowing how much money they need to retire (41%)

These more existential concerns loom much larger for many people than more practical considerations such as accessing capital (11%), leaving a legacy (16%) and needing to rely on others (19%).

COVID has a lot to answer for, and the natural assumption could be that the pandemic has exacerbated our fears about retirement. But one positive to emerge from the COVID era is that more people are considering setting financial goals – 34% are thinking about it, up from 17% in 2020¹.

And we remain an aspirational bunch. Most working Australians would rather fight for a better retirement than give up and settle for less – 61% would prefer to work longer (61%) than adjust their standard of living (34%) if faced with a market downturn.
 

How financial advice can help Australians plan for retirement

Research also highlights the important role advice can play in shaping retirement outcomes. Advisers can help by:

• educating their clients about how much they need to retire to increase visibility of goals, spur engagement and improve retirement savings
• emphasising the importance of planning ahead – those with financial goals expect to have a more comfortable retirement (53% compared with 38%)
• bridging the gap between what workers expect to need ($600,000) and what they expect to have ($400,000) by the time they retire.

And when you look at other forms of advice, there are positive signs of engagement in retirement planning.
 

¹  AMP 2022 Financial Wellness Research Report

Like to know more?

You can access our latest whitepaper which explores the needs and concerns of retirees today in more detail, as well as providing actionable steps you can take today, to further support your clients.