The latest research into retiree sentiment has found they are still seeking financial security and peace of mind, but are not accomplishing these goals.
The report, “Feeling financially comfortable? What retirees say”, was launched today by National Seniors Australia and found many retirees felt they had to “gamble” their life savings on superannuation that was heavily invested in the domestic equity market.
According to the study, the finding reflects poorly on the ability of the superannuation system to convert savings made during the accumulation stage of an individual’s life into a reliable income to satisfy all of their years in retirement.
“When members reach retirement, the risk of managing their superannuation savings shifts from the super fund trustee to the retiree, who may have little experience with this,” National Seniors Australia chief executive John McCallum said.
“It is both a clear opportunity and a responsibility for the superannuation sector and government to reset the regulatory and product focus of superannuation to better meet the needs of Australian retirees.”
The report’s results showed 25 per cent of retirees said they could not tolerate losses that were greater than 5 per cent of their savings, but they still invested their entire retirement nest egg in the Australian equity market, with a further 43 per cent of respondents investing some of their money in domestic shares.
The study recognised from these statistics that retirees are exhibiting a conflict between their risk appetite and their investment behaviour.
Further, higher levels of financial comfort were found to be enjoyed by individuals who were using defined benefit pensions, according to the report. These people expressed having a regular source of income provided by these offerings gave them security, comfort and confidence in their retirement.
In addition, the research revealed the amount of savings individuals had was less important than factors such as personal values and social groups in determining investment comfort levels.
Challenger chairman of retirement income Jeremy Cooper noted the report indicated the urgent need to develop the retirement phase of the country’s superannuation system.
“Our system is doing a good job of helping Australians save for retirement, but the job remains unfinished. It’s time to shift the focus from accumulation to addressing the unique challenges faced by retirees who want access to secure income that lasts for life,” Cooper said.
Other report findings indicated longevity risk is still a significant concern among retirees, with women 40 per cent more likely to be worried about this issue than men.
It also showed 30 per cent of retirees regretted not having contributed more to their superannuation fund, with 70 per cent of this group being women.
