COVID impacts retirement plans

coronavirus retirement planning

The coronavirus has had a significant effect on Australians’ retirement planning, with many believing they will have to stay working for longer.

A recent study among Australians has revealed the coronavirus pandemic has had a significant effect on when they are planning to begin their retirement years.

The research published by public offer superannuation fund Equip found 26 per cent of respondents said COVID-19 has impacted their plans for retirement, with 11 per cent of individuals admitting the virus has delayed their retirement plans.

When examining specific demographics, 46 per cent of participants indicated they were likely to delay their retirement plans for four to five years.

Apart from COVID-19, the report found the current state of the economy, with rising inflation, was also causing concerns over the level of retirement savings people currently have, with 22 per cent of respondents saying their annual income had fallen in the past two years and an additional 25 per cent admitting to having a lower level of disposable income now when compared to 2020. The situation was more stark among individuals over the age of 55, where 33 per cent reported a drop in disposable income in recent years.

“Purse strings have been tightened due to the rising cost of living and the fallout from COVID. It’s not surprising that this pressure is causing some retirement plans to be revised,” Equip chief executive Scott Cameron said.

The study identified the pessimistic attitude toward retirement may be being triggered by an overestimation of the amount of money required to fund a comfortable retirement. To this end, 36 per cent of those surveyed thought an individual required $750,000 to retire comfortably. This is in contrast to the Association of Superannuation Funds of Australia’s Retirement Standard, which states single people will need $545,000 and couples will need $640,000 to fund a comfortable retirement.

“Many Australians are grossly misjudging how much they need in their reserve to retire, which is likely causing additional, and perhaps unnecessary, stress,” Cameron noted.

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