Running out of money in retirement is an increasingly common fear among Australians, but there are ways to combat it.
Former NSW Liberal leader Kerry Chikarovski says changes to negative gearing would affect a “very broad” group of Australians rather than just the wealthy. “People seem to think that negative gearing is the gift to the rich,” Ms Chikarovski told Sky News Australia. “There are a lot of people out there who are not extremely wealthy who decide that they are going to negative gear a property because that helps them guarantee their retirement.”
New research commissioned by advice and accounting group Findex has found people adopt a “kick it down the road” mentality towards retirement, and only 5 per cent of Baby Boomers are very confident they have the financial resources needed.
More than three times as many Generation Xers have the same level of confidence, while for Millennials the figure is 22 per cent.
Baby Boomers are worried about not having enough money in retirement. Picture: iStock
Findex co-CEO Matthew Games said it signalled that people operated under the assumption that their super and savings would be sufficient when the time came to retire.
“But as they eventually get closer to the retirement stage of life and have to meaningfully address the monetary aspect of this, the reality sets in and are faced with realisation that they are actually not set up sufficiently,” he said.
Younger generations had more time to ramp up their finances for retirement, Mr Games said, and would also benefit from the increase in compulsory superannuation to 12 per cent from 2025.
Findex’s YouGov survey of 35-to-65-year-olds also found eight out of 10 believed they would benefit from financial advice, but only three out of 10 had sought it – put off by the cost, their own income and procrastination.
Mr Games said advisers could help people improve their financial literacy and confidence, and people could also:
• Focus on reducing debts such as their mortgage.
• Consider separate investments outside super to provide flexibility.
• Review their superannuation investment options now.
• Understand how little things today could make a big difference tomorrow.
“Our advisers often talk to clients about investing a day in yourself,” he said.
“Take an annual leave day and spend it talking to your bank, your gas, electricity and internet provider. Review all your monthly expenses and look for a better deal.”
Separate research by Equip Super, which manages $30bn of people’s savings, found more than 40 per cent of its pre-retiree members had no plans in place for their retirement.
It found almost one-third felt they were not able to control when they could begin winding down from work.
Scott Cameron, CEO of Equip Super
Findex co-CEO Matthew Games
Equip Super chief executive Scott Cameron said retirement often came earlier than expected because of issues such as spouses retiring, redundancy or ill health.
“We are also seeing Australians being more focused on the here and now, due to the rising cost of living and the ongoing issues from the pandemic, which may also lead to a lack of planning for when they will retire,” he said.
Mr Cameron said it was unsurprising that people were worrying about running out of money “against the backdrop of rising inflation and higher interest rates”.
He said the more people planned, the more confident they would feel.
“Many super funds have vast amounts of online information and resources to help equip their members with the right information today so they can have a better tomorrow.”