Majority of Australians to retire comfortably

07-Feb-2017

By Daniel Paperny

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More than half of Australian households expected to have enough for a comfortable retirement if they combined their superannuation savings, personal assets and the age pension, according to a new study by Commonwealth Bank of Australia (CBA).

The bank’s “Retire Ready Index” report looked at the savings of Australia’s working population aged between 25 and 64 and the proportion projected to have suf´Čücient assets – including superannuation, personal wealth and age pension entitlements – to meet a comfortable level of retirement.

The report drew on data from Rice Warner and the Australian Bureau of Statistics, using the Association of Superannuation Funds of Australia’s retirement standard – defined as $43,372 a year for singles and $59,619 a year for couples – to examine the factors affecting retirement adequacy and the challenges facing product providers as Australian retirees lived longer.

When including the age pension, the report found 7.7 million Australians aged between 25 and 64, or 53 per cent of the working population, were expected to be ready for retirement, while 5.1 million Australians were unlikely to have enough to secure their retirement futures.

However, when the age pension was excluded, just 17 per cent of the working population were able to achieve a comfortable retirement standard.

CBA executive general manager of advice Linda Elkins said gaining access to financial advice about their retirement savings would help many Australians who currently fell short of reaching income adequacy in retirement.

“The CommBank Retire Ready Index shows how important superannuation will be for the long-term financial well-being of young Australians,” Elkins said.

“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.”

The report also found millennial Australians would need to save more for retirement than other cohorts due to increased life expectancies, with super expected to comprise 78 per cent of retirement assets for 25 year olds working today.

“The main driver of reduced adequacy at younger ages is improved life expectancy,” it said.

“These offset the impact of the planned increase in superannuation guarantee contributions and the longer period of saving with superannuation guarantee contributions.”

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