Nearly half of pre-retirees believe their retirement savings will run out before they die and three quarters remain unaware of the retirement income products their superannuation fund is offering, according to new research released by Investment Trends.
The findings are part of the research firm’s “2022 Retirement Income Report”, which found the confidence of pre-retirees had fallen to its lowest level in 10 years and only half were prepared for retirement, compared to 75 per cent in 2021.
Investment Trends stated the reason for the drop in confidence was due to concerns about the cost of medical treatment and inflation, with pre-retirees estimating their income in retirement to be on average $3200 a month, but the income required for a comfortable retirement to be on average $4300 a month.
Investment Trends research director Dougal Guild said: “In addition to relying on the government age pension, we are starting to see non-retirees making plans to reduce their spending and delay the start of their retirement in order to close this retirement adequacy gap.”
Given this gap, 47 per cent of pre-retirees surveyed expected they would outlive their retirement savings, while 75 per cent also stated they were unaware of the retirement income products offered by their superannuation fund or whether they were suitable for their use, and only 16 per cent were aware of the products and intended to use them.
“Non-retirees recognise longevity protection (34 per cent), a guaranteed minimum income (27 per cent) and flexible access to funds (25 per cent) as the most essential features to be offered,” Investment Trends stated.
“However, many who value these features do not know they exist in current offerings, for example, only 7 per cent of non-retirees are aware of a retirement income product that provides protection against market falls.”
Guild said while the preference for retirement products varied by age and super balance, “we found that many members are unable to articulate their requirements, highlighting the importance of providing both education and advice at this life stage”.
Investment Trends noted the concerns about not having enough money and a lack of information was driving pre-retirees to seek retirement-related information and the obligation for super funds to publish their retirement income strategy meant they were the most used source of retirement information (63 per cent), followed by financial advisers (33 per cent).
“Retirement calculators and financial advice have been found to elicit repeat engagement and can be great digital conversation starters,” the research firm noted.
“Non-retirees also shared that they are seeking enhancements around projections of the cost of living for different lifestyles, expected weekly income and inflation adjustments.”
