Increasing numbers of people are heading into retirement with insufficient funds to be considered ‘self-funded’ and will be more likely to rely on government benefits, according to research group Roy Morgan.
The group estimated 439,000 people would retire in the next 12 months, which was an increase of 6 per cent on the 414,000 people who retired in 2018 and an 11 per cent rise on the 395,000 people who retired in 2017, nearly equally split between men and women.
In estimating the number of retirees, based off an annual survey of 50,000 consumers, Roy Morgan found the average gross wealth of those planning to retiree was $299,000, excluding average debt levels of $27,000, which reduced average net wealth to $272,000, excluding owner-occupied homes.
It stated while the average gross wealth level had increased, albeit only by 2 per cent since 2017, that level “is generally considered to be inadequate for self-funded retirement”.
“The overall conclusion from this is that currently intending retirees will be relying on government benefits for some time yet, given the fact that the Association of Superannuation Funds of Australia estimates that an individual would need $545K and a couple $640K for a ‘comfortable retirement’,” the research group added.
Roy Morgan industry communications director Norman Morris said superannuation was contributing to the average gross wealth of those planning to retire, but was still insufficient to fully fund their retirement, and other savings were being affected by changes to working patterns and market conditions.
“A contributing factor to savings falling short of desirable levels has been a reduction in the average age of intending retirees, which has fallen from 62 years 12 months ago to 58 years currently. This obviously has the potential to reduce savings due to a shorter working life,” Morris said.
“Additional pressures on retirement decisions are the declining real estate market, share market volatility and superannuation conditions if there is a change of government. These factors have the potential to delay retirement decisions and encourage people to keep their jobs longer, particularly if the government tightens up the qualifications for the aged pension or other retirement benefits.”
