Less than half of super fund members expect a comfortable retirement

By Fergus Halliday

December 08 2021
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The older you are, the more likely you are to feel optimistic about retiring from the workforce.

New insights into how Aussies feel about retirement may prove useful for super funds looking to think about life beyond accumulation.

According to research published by Challenger, just 40 per cent of super fund members expect to have a comfortable retirement.

What’s more, the data showed a clear trend where those closer to retirement were typically more optimist about it.

Forty-six per cent of surveyed Australians older than 55 expected to have a comfortable retirement, compared with 35 per cent of those under 55 years of age.

Challenger’s head of retirement income research Aaron Minney attributed this disparity to the difference in savings between younger and older cohorts.

The short version: since they’ve had more time to grow their nest eggs, older Australians were more likely to see the evidence and benefits of compound interest working in their favor.

“Aside from the obvious, that people with less savings are more worried about their finances in retirement, the survey also highlighted that; women, people under 65 and those expecting a basic lifestyle are more likely to be concerned about outliving their retirement savings,” he said.

While 54 per cent of the already-retired considered their lifestyle to be comfortable, Mr Minney also noted that many members were unaware of longevity risk and how to manage it.

“There is this one-sided concern that they might outlive their savings rather than also thinking about solutions that can provide secure lifetime income,” he said.

When asked for their plan B, Challenger found that 57 per cent of respondents said that they would look to change their spending habits to manage the risk of running out of money.

Those who had taken the time to prepare a plan tended to have fewer concerns than those who didn’t.

Thirty-nine per cent of those with a plan said they weren’t concerned about outliving their savings, with 17 per cent of those without a plan said to be equally carefree.

That being said, 47 per cent of those with a plan admitted that it was a mental one.

Though those over the age of 70 were twice as likely to have one, only 13 per cent had a formal plan in place overall.

In light of the introduction of the federal government’s new retirement income covenant, Mr Minney said that these insights could prove to be a useful starting point for super funds looking to get a better sense of how members feel about their retirement.

“It’s really clear that the majority of members are concerned about outliving their savings so it will be important for funds to find solutions that will help overcome this concern, support members with plans that help them understand retirement risks, and ultimately lead to better financial outcomes for their members,” he said.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

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Retirement