New research from RaboDirect has found that many Australians are at risk of retiring without enough money and are not financially prepared for the future.
The 2017 Financial Health Barometer survey of 2,300 Australians found that 44 per cent of believe they’ll run out of money in retirement, only 32 per cent make voluntary contributions to their super, and the super ‘gap’ between what people expect to retire with and what they’ll need has grown from $268,502 in 2014 to $353,125 in 2017.
The results were released on Thursday in the RaboDirect Super & Retirement Report ahead of the raft of changes to the superannuation system set to take place on 1 July.
“It’s concerning to see a large disparity between what Aussies expect to need to retire with versus what they’ll actually have," said Bede Cronin, head of RaboDirect.
"Even more worrying is that nearly one in five (18 per cent) Australians are banking on an inheritance to get them through their retirement. The report, and incoming changes to the super system, highlight a critical need for Aussies to take stock of their super and savings to plan for the future."
Gender super gap
According to the report, Gen Y is demonstrating the most positive savings behaviour, with 40 per cent making voluntary contributions to their super, followed by 31 per cent of Baby Boomers and 25 per cent of Gen X. Seventy one per cent of Gen Y have used or expect to use a financial planner and on average expected to work only until they’re 60.
It also found that the super gap between men and women remains, with women expecting to have nearly $200,000 less at retirement then men. However, women are more likely to use a financial planner (30 per cent versus 23 per cent), which will help to build their super strategies.
“It’s encouraging to see that Gen Ys are being proactive with their finances and setting themselves up for success. There are clear benefits for your future by taking small steps with your finances and we’re hoping to see some of this behaviour rub off on other generations,” said Cronin.
Nerida Cole, managing director, head of advice at Dixon Advisory said although women face significant barriers, there were some positive budget announcements that could help address the gender super gap which should not be overlooked.
“The five year catch-up contribution provision; improving access to concessional contributions (particularly for contract workers); and the Low Income Super Tax offset (LISTO) could help to boost women’s super savings. There are also a range of strategies that couples can take advantage of to leverage tax free thresholds and build super," she said.
“No matter what life stage you’re at, there are strategies available to build your retirement savings and there’s still time to maximise this year’s more generous contribution limits, before the new super rules take effect 1 July 2017."