Gen Z Australians – those aged between 25 to 34 – now expect to need $106,000 a year in retirement, almost double what today’s retirees actually spend, according to Vanguard’s third annual “How Australia Retires” survey.
Vanguard Investments managing director Daniel Shrimski said: “In just two years since our first ‘How Australia Retires’ report, we’ve seen a sharp rise in retirement income expectations among younger Australians. It’s clear that needs and aspirations for retirement are evolving – and fast.
“We’re also seeing that more Australians are expecting to retire with a mortgage, with one in three millennials and one in four baby boomers anticipating they’ll carry housing debt into retirement.”
These findings are based on a survey of 1800 Australians aged over 18, with an even split between working age and retired Australians, and an almost even split between male and female (49 per cent/51 per cent).
The $106,000 a year those aged 25 to 34 now expect to need in retirement is a 59 per cent increase on the $66,000 they expected to need in 2023.
In comparison, for Australians under 45, the average retirement income estimate increased to $100,000, compared to $89,000 in 2023, while retired couples reported spending $55,000 annually, emphasising the gap between expectations and reality in retirement.
The survey also highlighted the importance of financial advice, with 40 per cent of Australians who said they had previously met with a financial adviser being very or extremely confident about funding their desired lifestyle in retirement.
Another 39 per cent of those who had met with a financial adviser said they were moderately confident about their retirement.
That compared to 22 per cent of Australians who had never engaged with an adviser who said they were extremely or very confident about their retirement.
“Importantly, this research shows that it’s never too early to start thinking about your financial future. Even small actions – like checking your super more often or understanding the fees you’re paying – can build real confidence over time. Australians who take steps like planning ahead, boosting financial literacy and engaging with their super feel far more prepared for retirement,” Shrimski said.
Having a plan was also a sign of confidence, with those that did three times more likely to feel confident about being able to fund their retirement and 65 per cent more likely to have a positive outlook on life after work.
“While a solid retirement plan will mean different things to different people, the findings told us that those with more confidence were likely to have done things like make extra super contributions or obtained financial advice,” Shrimski said.
Findings from the research also suggest retirees may not be as keen to downsize as many believe.
“Less than 30 per cent of retirees have moved or plan to move since retiring … Most retirees simply aren’t planning to sell,” Shrimski said.
“When you ask retirees how they think about the family home, 63 per cent said they intend to stay for life or leave it as an inheritance. That compares to only 9 per cent who view their home primarily as a source of retirement income.”
