The WEF suggests that Australians will have enough savings to last 9.7 years into retirement.
Men will run out of super on average 9.9 years before they pass away and females will outlive their savings by 12.6 years, according to the report.
What is Australia doing to address this?
The WEF believes the Australian system is one of the most well-developed from an accumulation perspective but has an underdeveloped framework when it comes to retirement.
In a recent speech at the Bloomberg Buy-Side Forum, Assistant Minister for Superannuation, Financial Services and Financial Technology Ms Jane Hume addressed this shortage.
In her speech, Ms Hume outlined how the government planned to make sure funds in retirement phase continued to work hard for members in order to help address this issue.
“There is work to be done to ensure that retirees’ money continues to work hard in that retirement phase. Currently, there is very little guidance on how retirees should draw down their savings when they reach retirement,” Ms Hume said.
“The government is addressing this by developing a retirement income framework which will include a covenant required for funds to develop a retirement income strategy for members,” continued Ms Hume.
The fine print
The figures from the WEF are based on starting contributions of 3 per cent of $30,000 salary, which is increasing by 1 per cent a year to 9 per cent and adjusted for salary growth and inflation.
In the study, it is concluded that retirees will reduce spending to 70 per cent of their final pay income. The WEF’s report states that there is growing evidence that spending habits change, meaning investors might actually spend less than 70 per cent of their superannuation.