Expectations of what level of funds are necessary to retire appear to be vastly overinflated by many Australians, with those who have never received advice putting the figure as high as $2 million, according to new research released by Colonial First State.
The research, contained in Colonial First State’s “Rethinking Retirement” report, found estimates of what was required to retire by 2247 people, including 430 retirees, surveyed was well above the standard calculated by the Association of Superannuation Funds of Australia (ASFA).
“When asked to provide a dollar estimate of how much they believed they would need to retire comfortably, the average was $1.6 million. Those who have never received financial advice estimated they need to save $2 million for a comfortable retirement,” the report stated.
“By way of comparison, the ASFA Retirement Standard shows a super balance of $690,000 is required to achieve a comfortable retirement as a couple and $595,000 for a single person.
The report noted this wide difference in figures was the result of low levels of engagement with superannuation and only 37 per cent of those surveyed would go to their super fund for information about retirement planning, while only a third of pre‑retirees aged 50 to 64 were interested in hearing from their fund about retirement in general.
“These findings reflect an unwillingness among many Australians to ask questions and seek advice. Many would benefit from engaging with their super and using freely available tools and resources such as a retirement calculator to manage expectations for retirement savings,” it said.
It noted those who had received advice had greater control over the timing of their retirement.
“Most Australians don’t get to choose when they retire. Two in three retire out of necessity. The number one reason most Australians retire is because of their own or their partner’s health,” Colonial First State said.
“Those who have taken an early and long‑term approach over their working lives to retirement income planning are likely to be in a better position and have a higher level of financial resilience and confidence as they grow older.
“Financial advice plays a significant role in giving Australians greater control over when they retire. Our research found that those who receive advice are twice as likely to retire at a time of their choosing.”
