Thursday, 4 July 2023
New research by Aware Super has revealed younger Australians aged under 35 are unrealistic and confused about their retirement future, more than older generations.
In the midst of the cost-of-living crisis, one of Australia’s largest super funds commissioned research to understand the retirement aspirations of Australians and how the current economic climate is impacting their goals and behaviour towards their retirement savings.
The research (n=3500 Australians) found those aged 16-34 are more optimistic about retiring earlier (31% believe before 55 years) when compared to the next oldest cohort (35-54 years old) surveyed (19% say before 55 years), meaning younger Australians are 48% more likely to think they are going to retire before 55.
Surprisingly, when asked about how much savings they would need to retire comfortably, almost one third of young Aussies (29%) think they need under $500,000 or don't know how much they need to retire (8%). This demonstrates a significant gap between reality and retirement aspirations for younger Aussies considering the average Australian couple requires $600,000 to sustain a comfortable retirement lifestyle, or $500,000 for a single, at age 67.
What’s more, this younger cohort is also more confident (41% versus 35% for 35–54 year olds) they will have enough funds to retire comfortably, yet 45% don’t feel the need to check their superannuation accounts regularly.
Aware Super’s Head of Advice, Experiences and Enhancements, Peter Hogg said the research results were concerning, particularly when it came to the younger generation’s retirement aspirations and how that reflected on their understanding of and behaviour with their superannuation.
“Many young Australians are keen to retire earlier than the generations before them, but the research tells us 41% have never made a voluntary contribution,” he said.
“It found that while Aussies are concerned about the current economic outlook, present finances are more of a focus than future investments
“For younger Australians wanting to maximise their superannuation savings, it really is never too early to actively engage with your super. Just $100 per month in additional contributions to your super would mean an extra $54,000 to your balance in 35 years.”
Consequently, 35% of Australians have never made changes to investments within their superannuation accounts, and almost half (46%) have never sought free financial advice from their superannuation fund.
“Superannuation is the largest investment portfolio most people are likely to have in their lifetime, but Australians at all life stages are potentially not as actively engaged in their super in light of the rising cost-of-living crisis,” Mr Hogg said.
“With the current economic climate, it’s easy for super to slip from your radar, but that’s probably more of a reason to give it a little attention. A small investment now can have profound effects on how much you love your retirement.”
Aware Super is committed to educating and engaging Australians with their superannuation. Following these research findings, the fund has developed the Super Helpful Guide to help Aussies quickly and efficiently get on top of the super.
The Super Helpful Guide provides support and general advice to help Aussies feel more secure, supported and educated to take control of their finances, boost their super and meet their goals for the future.
To download a copy of the Super Helpful Guide and find out more about how to maximise your superannuation visit: https://aware.com.au/member/what-we-offer/super-helpful