RaboDirect report encourages Australians to take small steps for a better retirement.
- 44% of Australians believe their superannuation will not fund their retirement
- Only 32% of Australians make voluntary contributions to their super
- Nearly 20% of Australians are relying on an inheritance from relatives for their retirement
New research from RaboDirect shows 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 Australians 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.
These results were released today in the RaboDirect Super & Retirement Report ahead of the raft of changes to the superannuation system set to take place on 1 July, 2017.
Bede Cronin, Head of RaboDirect says, “It’s concerning to see a large disparity between what Aussies expect to need to retire with versus what they’ll actually have. Even more worrying is that nearly one in five (18%) 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.”
“It’s not about big life changes, but simple actions that will make a difference. For example, contributing an additional $20 a week to your super over 45 years, can result in over $175,000 extra for your retirement*.”
The results highlight that Australians who do put a plan in place are better off in the long run:
- Overall, 69 per cent of Australians surveyed who make voluntary contributions to their super are twice as likely to believe that their superannuation will adequately fund their retirement and on average are $200,000 better off at retirement.
- 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.
- 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% versus 23%), which will help to build their super strategies.
- Both non-retirees and retirees say that staying healthy and active is a top goal for their retirement, followed by spending time with family, and maintaining a comfortable lifestyle so they’re not short of money.
“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,” Mr Cronin said.
Nerida Cole, Managing Director, Head of Advice, Dixon Advisory said although women face some 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.”
“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,’ Ms Cole said.
The important thing to remember is that there are still steps you can take to improve your finances whether you’re 18 or 65:
- Speak to a financial planner about your plans ahead of 1 July to ensure you’re making the most of the current superannuation contribution caps before the change and any relevant tax breaks.
- Assess options to make voluntary contributions to super. Pay down debt and your mortgage first, then consider contributions such as a salary sacrifice which are taxed at 15% and in some cases can lower your tax threshold. You may not be able to spare a great deal, but even a little will have a big impact over the years.
- Make a plan and set some small goals. Target saving the cost of a coffee each weekday for a month, then build on that in month two. Ensure you’re making the most of your savings by depositing into a high interest savings account or contributing to your super.
- Visualise the kind of retirement you want. Whether it’s continuing part-time work, mapping out your travel dreams or putting your bucket list down on paper.
- If you’re in or approaching retirement, it can be prudent to boost cash reserves to cover short-term expenses and ensure day-to-day living expenses and health costs are covered.
The incoming changes to superannuation are set to affect many Australians, providing a chance for all Aussies to review their current financials and make some changes. Through releasing the RaboDirect Financial Health Barometer Super & Retirement Report, RaboDirect aims to help all Australians become more aware of the importance of their savings and superannuation for a better retirement.
For further information or to arrange an interview, please contact DEC PR on rabodirect@decpr.com.au or phone 02 8014 5033.
*Calculations based on $20 on coffee per week from the age of 20 until to 65 at an interest rate of 5%. Credit source: MoneySmart calculator