Concern mounts over retirement shortfall


By Julie May

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There was growing anxiety among retirees, pre-retirees and accumulators in regard to them outliving their retirement savings, according to new research released by MLC and Investment Trends yesterday.

The “2014 Retirement Income Report”, based on a national survey of 6350 Australians over the age of 40, revealed 44 per cent of retirees expected they would outlive their retirement savings, which was up from 33 per cent a year ago.

Further, 51 per cent of pre-retirees and accumulators also expected to outlive their retirement savings, with only 10 per cent of Australians indicating they had a plan to address longevity.

MLC retirement solutions general manager Andrew Barnett said the research highlighted the average retirement savings gap was as much as $150,000, with people underestimating how long they would be in retirement by up to seven years.

“What we are not necessarily seeing is retirees address this issue of longevity – and that they may in fact need much more retirement savings than what they initially planned,” Barnett told a media briefing in Sydney.

Addressing issues such as longevity means retirees may not be faced with difficult decisions later in life, such as working longer, downsizing their family home or relying on the age pension.

“We know that as the number of Australians aged over 55 continues to increase, so does the focus on retirement planning,” Barnett said, emphasising that retirement should not be an afterthought.

The study showed Australians who did not have enough to retire comfortably expected they would become dependent on the age pension (44 per cent), continue working (43 per cent), reduce spending (42 per cent), downsize their home (36 per cent) and save more (28 per cent).

Meanwhile, 17 per cent said they would seek advice, 9 per cent said they would rent a room in their house, 7 per cent pointed to a reverse mortgage, 5 per cent said they would transfer to higher return investments, 4 per cent stated they would turn to their family and 13 per cent said they had not thought about it.

The report said three key factors that had helped Australians save for retirement were financial advice, increased awareness and information, and access to broader retirement income solutions.

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