The Commonwealth Bank’s Retire Ready Index reveals that only 53 per cent of households are ready for retirement, a percentage that dwindles to 17 per cent when the age pension is removed.
Just 6 per cent of Australians can sustain a comfortable retirement based on their superannuation alone.
Commonwealth Bank general manager advice Linda Elkins said it was another reminder that Australians have to actively plan for retirement.
“The good news is that many Australians who may not currently be on track for a comfortable retirement are very close [so] a little bit of planning could see them reach the comfortable level,” Ms Elkins said.
The report estimates that superannuation will hold 78 per cent of retirement assets for today’s Millennials. Ms Elkin said younger Australians need to begin planning sooner.
“Many people do not become engaged with superannuation until later in their working lives, but taking a keener interest in superannuation now, consolidating accounts into one super fund and contributing a little more each week can help younger Australians stay on track for a comfortable retirement,” she said.
However, Firefly Wealth director Adele Martin advised young Australians against becoming too reliant on super.
“While on paper super makes sense because of the tax advantages, the other thing you have to bear in mind is, it’s quite a long time before you can access the money so you lose some flexibility and the other thing is the government can restrict it before you make it to retirement,” Ms Martin said.
“Instead, we can build wealth outside of superannuation, and as they get closer to retirement and it becomes more unlikely the government may tinker with it, then superannuation makes more sense.”
According to the index, single women are less ready for retirement than single men, with 22 and 31 per cent prepared respectively.
“Women have longer life expectancies and therefore need more assets to maintain a comfortable level of retirement,” Ms Elkins said.
“Women also generally have lower retirement savings due to career breaks during their child-bearing years and lower average income levels throughout their working lives.”
To boost your superannuation balance, Commbank recommended Australians consolidate their different accounts, have an accurate idea of their retirement needs, and be across the impending super reforms effective 1 July 2017.