That’s according to advocacy group National Seniors Australia. In a new report, the group said that given life expectancy at 65 has increased markedly since the 1980s, Australians have to do “something their parents and grandparents didn’t think about – plan for a longer life”.
However, the research found that a quarter of people hadn’t planned for longer life spans. Further, those who had planned still hadn’t planned for the final phase of their lives.
While only 3 per cent expected to spend more money in later life, 61 per cent planned to spend a steady, wage-like amount throughout their retirement. Thirty-six per cent planned on spending more in the early years.
National Seniors research director Professor John McCallum said seniors need to have more clarity about how their plans align with reality.
He explained, “Earnings from 40 to 50 years of work may have to cover 80 to 90 years of life, but medical and aged care bills tend to get higher as we get older and few people are ready for this.
“There’s also an obvious contest between spending on leisure activities such as travel, versus providing for better care. Australians have a negative view of later life and don’t think seriously enough about it.”
The report, Hope for the best, plan for the worst? Insights into our planning for a longer life, argued that there is “limited availability and take-up of financial products that can assist individuals to efficiently manage the risk of outliving their savings”.
“The majority who are [planning for extended life spans], are planning for even spending over time, like using a wage, rather than for more in their later years when their needs will be highest,” the report said.
Noting that the federal government spent $17.4 billion on aged care in the last financial year, Professor McCallum said it’s important that the government identifies practical savings options for older Australians.
He noted that people who did not have enough saved could be depressed, or even suicidal.
The research highlighted the story of an 83-year-old woman who did not have enough saved.
She said, “I know my money will run out before I die. I can only hope that I am struck by a bus before I become feeble and can’t care for myself.”
Reflecting on this, Professor McCallum said people need to have “clear direction and help” when planning for retirement.
“More than half the survey respondents (56 per cent) said ‘yes’ to the option of longevity insurance in superannuation for maintaining income past the age of 85,” he said.
“The other option was paying 10 per cent of your savings when you retire to receive income for life once you reach 85. A total of 57 per cent of those surveyed said ‘yes’ to this, but 43 per cent said ‘no’, including 11 per cent who did not think they would live that long.
“Better options for people to fund longer lives and the motivation to do so need to be provided. Even attractive options may initially need some government incentives and, maybe, compulsion.”