Regulation, Retirement, Superannuation

Market conditions prompt delay in retirement

A new Roy Morgan survey has found negative forces currently pervading the economy and investment markets are likely to result in more Australians holding off their decision to retire.

The Roy Morgan Single Source survey concluded factors such as falling house prices and Australian equity values and their effect on household wealth, along with issues like a change in the imputation credit refund rules and proposed amendments to negative gearing will potentially result in individuals postponing their retirement to allow them to build more wealth in the immediate future.

Following on from this, the research house found the effect declining markets are having on retirement savings structures such as superannuation and their financial growth will result in a continued reliance on the age pension as asset balances continue to be inadequate for a comfortable lifestyle in retirement.

“The average level of savings and superannuation for those intending to retire in the next 12 months is well below what is required to be able to lead what ASFA (Association of Superannuation Funds of Australia)  describes as a comfortable lifestyle,” Roy Morgan industry communications director Norman Morris said.

“This will put more pressure on government funding for some time yet unless there are changes to eligibility rules, taxation or superannuation regulations.

“Additional pressures currently on retirement decisions are the declining real estate and stock market values, which have the potential to delay retirement and encourage people to keep their jobs longer.”

The research revealed the average net wealth of a pre-retiree is $305,000 once a mean debt level of $26,000 is taken into account. This figure falls well short of the ASFA determination that an individual requires $545,000 for a comfortable retirement and a couple $640,000.

The survey was conducted over the 12 months to September 2018 through face-to-face interviews with over 50,000 consumers, 400 of whom intended to retire in the coming year.

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