The latest industry research has shown the rising cost of living continues to be of major concern for older Australians approaching retirement, with increasing general expenses and financial security among the factors causing the cohort the most angst.
The third annual Challenger Retirement Happiness Index revealed 57 per cent of those surveyed expressed worry about the impact of rising costs on lifestyle and 54 per cent of participants were worried about their financial security once they had stopped working. The study also found 46 per cent of respondents were apprehensive about running out of money in retirement.
With regard to specific groups, the report showed women were more concerned about running out of money when they left the workforce, with 48 per cent reflecting this sentiment as opposed to 43 per cent of men. This issue was also found to cause 49 per cent of pre-retirees angst, with 39 per cent of those Australians already in retirement sharing this feeling.
“Today’s retirees are the first generation having built significant superannuation savings. Yet, after decades of focusing on saving, many retirees find it surprisingly difficult to switch to spending once they retire,” Challenger customer chief executive Mandy Mannix said.
“Most Australians have felt the pressure of rising costs, whether it’s paying for essentials like petrol, going out for lunch or taking a holiday. These higher prices can be felt even more by retirees who now face the reality of living on a set amount of money for the rest of their lives.
“The dollar value of a lump sum when you retire can seem like a lot of money, but it has to last a long time. It can be hard to know how much to withdraw, knowing that the purchasing power of $1 million today can halve in 20 years’ time. The impact of inflation can be dramatic, and it is a real concern.”
On average, the people surveyed thought they would need an annual amount in retirement of $70,398, or about $1350 a week. This is significantly higher than the Association of Superannuation Funds of Australia Retirement Standard recommendation that an annual income of $54,840, or $1055 weekly, would provide a comfortable lifestyle for an individual when they are no longer working.
The survey was conducted by YouGov on behalf of Challenger, with more than 2000 participants over the age of 60.
