Superannuation shortfall fears: How anxiety over super is making our lives worse

Australians are increasingly concerned that they don’t have enough pension to retire, with new research showing that workers typically believe they will be $200,000 short.

AMP’s Financial Wellness report found that 70 percent of women were concerned about insufficient retirement savings, compared with 56 percent of men.

Rising inflation and pressure on the cost of living are heightening retirement concerns, leading to fears that Aussies are “unnecessarily endangering quality of life” in their later years.

AMP identified a ‘fear of running out’ phenomenon where Australians typically thought they needed $600,000 to retire but expected to have only $400,000 saved.

And the latest financial data shows the $200,000 gap is close to reality, based on superindustry recommendations.

The Association of Superannuation Funds of Australia, the highest body for the superindustry, recommends having $535,000 available to fund a comfortable retirement for someone who has paid off their home and qualifies for a partial pension at age 67. age – or $545,000 for someone who retires sooner.

The most recent data from the Australian tax office shows that people aged 65 to 69 had an average pension balance of $383,367.

That represents an average deficit of $151,633 for Aussies at or approaching retirement age, based on the recommended retirement balance.

Ben Hillier, AMP’s general manager of pension solutions, said Australians were so concerned that they wouldn’t have enough to retire that they are cutting back.

“Millions of Australians unnecessarily endanger quality of life in later years,” he said.

Mr. Hillier quoted the Federal Treasury’s 2020 Retirement Income Review, which found that the elderly died with as much as 90 percent of their retirement benefits untouched.

Bestselling author Scott Pape, known as the Barefoot Investor, is a critic of the pension industry’s retirement goals.

“The superindustry has played for far too long for the millionaires in the membership ranks,” Pape told his followers last month.

Pape has instead endorsed a recommendation from Super Consumers Australia, which believes $258,000 is enough for a person who has paid off their mortgage.

The IRS data showed average retirement balances, across all adult age groups, of $145,388.

AMP identified a ‘fear of running out’ phenomenon where Australians typically thought they needed $600,000 to retire but expected to have only $400,000 saved. (Stock Image)

Those in the 55 to 59 age bracket had an average balance of $246,771, compared with $108,217 for those ages 40 to 44 and $323,871 for those ages 60 to 64.

AMP surveyed 2,000 people from mid to late June.

The data was collected before the Australian Bureau of Statistics revealed that headline inflation had risen by 6.1 percent in the year to June, a level double the Reserve Bank’s target of 2 to 3 percent.

The RBA expects inflation to reach a 32-year high of 7.75 percent in 2022.

The AMP report found that women aged 50 to 59 were particularly concerned about higher living costs.

“Recent economic trends, including higher cost of living, rising inflation and volatile investment markets, now dominate people’s thinking about retirement,” it said.

Women also tend to have less in super than men, which makes them extra worried.

“Single parents and those working in the hospitality, healthcare and social assistance sectors are also most concerned about their retirement,” the AMP report said.

“This reflects a range of factors, including smaller super balances, longer lives and their greater chance of managing the care of older relatives.”

Across all age groups, women had an average balance of $129,506, compared to $161,834 for men.