High numbers of retirees have accumulated superannuation for their retirement, but many intend to retain it for future health and aged care needs rather than improve their lifestyle, according to research conducted by National Seniors Australia (NSA) and Challenger.
The research based on a survey of 3345 NSA members and their associates, released in a new report titled “The evolution of retirement income: A 2022 snapshot”, found 85 per cent of people had accumulated super for their retirement.
However, nearly the same amount of survey respondents indicated they would be holding on to their accumulated savings for future expenses related to health and aged care.
NSA chief executive and research director Professor John McCallum said the survey showed the compulsory super system had enabled older Australians to enjoy a comfortable retirement and the majority had used it as the main source for accumulating retirement capital.
“In short, compulsory super delivers what it was designed for: to provide retirees with an income that maintains their working-life standard of living,” McCallum said.
“Retirees increasingly need to understand that their retirement savings are not so much a nest egg, but a means of achieving the best standard of living possible during their retirement years.”
Addressing this issue, Challenger head of retirement income research Aaron Minney said health considerations had led to a general reluctance by retirees to increase the level of drawdown from their super to improve their lifestyle.
“The survey shows that retirement income reforms could not have come at a better time,” Minney said.
“Many retirees cut back on their lifestyle rather than spending their savings for the purpose it was intended. Hoarding the nest egg means they are missing out on some of what they could enjoy.”
The survey noted nearly 84 per cent of respondents listed future health and medical costs as the most common reason for preserving retirement capital, but having money to cover unexpected expenses or emergencies was also a priority, with 70 per cent of people setting aside funds for this purpose.
This intention to maintain capital was more likely for men or those who wanted to help family or a friend to access aged care, according to the survey, which also found around two-thirds of respondents said it was somewhat or very important to leave the home as a bequest.
