Pre-retirees concerned and underprepared

Almost one in three Australians do not believe they will be in a comfortable financial position when they retire.

21-Jul-2017

By Daniel Paperny

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Almost one in three Australians do not believe they will be in a comfortable financial position when they retire and half of those nearing retirement have not begun planning for it, according to a new study.

The research prepared by Australian Unity and Empirica into retirement planning collated the responses of 1000 baby boomer Australians across the country and looked at their preparedness for retirement.

The research explored both the attitudes and concerns of this group about their retirement futures as well as the steps they were taking to prepare for it.

It found that one in two Australians aged between 45 and 65 who were approaching retirement said they were not proactive about preparing for their retirement nor had they started planning for it.

Australian Unity Wealth chief executive David Bryant said the data was “worrying” given there was a clear lack of understanding of the changes to superannuation tax concessions effective from 1 July this year, and how this would affect those nearing retirement.

“The data shows more than three-quarters of 45 to 64-year-olds are running blind. They’re neglecting to get advice, not proactive about planning and a good majority have no idea about the recent government changes,” Bryant said.

“We know that today you need approximately $1.5 million to $2 million to fund a comfortable retirement into your 90s [but] the research shows us the majority of baby-boomers have about 10 per cent of this.

“What’s clear is that many baby boomers, though reliant on super for their retirement, don’t understand it and don’t have a plan for their retirement beyond it.”

Half of all retirees and pre-retirees, the report said, did not believe they were using the best investment products and strategies available to achieve their retirement goals, yet were reluctant to seek professional advice due to a lack of financial literacy, previous bad experiences with a financial adviser, or not having enough money to invest.

Speaking to financialobserver, Australian Unity’s Personal Financial Services chief executive Steve Davis said this was concerning given that past client surveys had consistently shown advised clients were better informed and more optimistic regarding their financial outlook.

“Critically, if their clients’ financial goals change along the way, or if the legislative or investment framework in which we all operate changes … a professional adviser will be able to modify a financial plan in response to this to keep their clients on track,” Davis said.

“The cliché, ‘a problem shared is a problem halved’ really applies in this situation and … talking to an expert that is qualified on the super and tax reforms can completely change the game for someone who has put retirement in the ‘too hard’ basket.”

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