One third of younger Aussies aspire to retire before the age of 55

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 

Note to Editors

Research key findings

• Younger Aussies (aged 16-34) are 48% more likely to think they are going to retire before 55 when compared to the next oldest cohort (35-54 years old) surveyed (31% vs 19%)
•  35% of Australians have never made changes to investments within their superannuation accounts
• 1 in 5 Australians don’t know how much they need to retire 
• More than one third of Boomers (Australians aged 55-69) are not confident they will have enough to retire (34%) 
• 8% of Australians plan to make a voluntary contribution this financial year
   

State vs State 

• More South Australians said they don’t have spare funds (37%) than the rest of the Australian population (30%) 
• Queenslanders are less likely to be concerned about outliving their retirement savings (25%) than the rest of the country (31%). However, over one third of Queenslanders Page 3 have never made changes to investments within their superannuation account (35%), and two fifths have never sought free financial advice (41%)
• West Australians are less likely to voluntarily contribute (24%) than the rest of the population (28%) and West Australians are less concerned than other states about the current cost-of-living crisis (49% WA vs 60% general population)
   

The economy

• Australians are concerned about the rising cost of living. In fact, 92% of Aussies are concerned or extremely concerned with the rising costs of living and its impact on their future savings. 
• Australians 35-54 is the age group with the largest proportion of respondents concerned with outliving their retirement savings and lacking funds to retire 
• Respondents 70+ are more likely than other age groups to be concerned about the cost of aged care (76%) 
• More than one third (37%) of Australians are ‘willing to cancel my death cover, disability cover or income protection insurance to save money’  
   

Retirement

The research demonstrates a significant gap between reality and retirement aspirations, along with a lack of confidence around perceived saving goals for retirement.  

• 1 in 5 Australians don’t know how much they need to retire
• Almost one third of young Aussies (29%) think they need under $500,000 or don't know how much they need to retire (8%) 
• More than one third of Boomers (Australians aged 55-69) are not confident they will have enough to retire (34%)  

When asked why they were not confident in having enough savings to retire comfortably, there were differences in responses across all age groups. The majority of Australians (61%) are neutral to not confident that they will have the money to retire comfortably

• Australians 16-34 are more likely to list economic concerns as reasons for their lack of confidence. They listed increased cost of living (84%) inflation, (71%), inability to earn a higher wage (36%), inability to purchase property (35%), and lack of knowledge about the amount needed (29%) as reasons why they are unconfident
• Australians aged 35-54 are least optimistic for a comfortable retirement, with 41% not confident to extremely unconfident 
• Australians 35-54 were more likely to look inward for blame, being more likely to say not investing early enough (35%), and inability to earn a higher wage (36%) as reasons why 
• Australians 55-69 were more likely to start worrying about the future, being more likely to say the cost of aged care (32%) and loss of job/inability to work due to illness (19%) as reasons why they are unconfident
• Australians 70+ have more practical concerns, being more likely to say the cost of aged care (52%) for their lack of confidence  
   

Finance and superannuation behaviour

Australians at all ages are not taking their investments in super as seriously as their other major financial commitments such as mortgages, bills and insurance.  

• 65% of Aussies said their day-to-day finances are more of a concern than their superannuation balance
• Almost half of Australians have never sought free financial advice from their superannuation fund (46%)  
• 35% of Australians have never made changes to investments within their superannuation accounts  

In fact, 'Where my superannuation is invested’ is low on the list of concerns impacting future savings and only 8% of Aussies are planning to invest money into their super at the end of this financial year. 

Voluntary contributions  

• 8% of Australians plan to make a voluntary contribution this financial year
• 28% of Australians would make a voluntary contribution this year if they have the funds  
• 16–34 year olds are more likely to be saving spare funds (22%) and also believe there to be not enough time before the end of the year to make a voluntary contribution (6%) 
• 35–54 year olds are more likely to put any spare funds into their mortgage / offset account (12%) and less likely to say they will be saving any spare funds (14%)  
• Of all age groups those 55-69 are most likely to make a voluntary contribution to their super if they had spare funds (37%), followed by 35-54 (29%), 16-34 (23%) and then 70+ (19%) 
• 70+ most likely to say they don’t have any spare funds (39%) and if they did, they would be saving it (25%) 
   

Research details

The research was conducted in June 2023 by Dentsu Intelligence. A robust sample of n=3500 Australians, aged 16 years and over, with superannuation or pensioner accounts, were surveyed. Results were then weighted to reflect the target population by age, gender and location. 

About Aware Super: 

Meet Money magazine’s Best Super Fund and a Canstar Outstanding Value award winner for 2023^ : Aware Super. As one of Australia’s largest profit-for-members funds, we always remember whose money it is and whose future we’re looking after. Page 5 That means being super helpful in ways our 1.1 million members need, and sometimes in ways they don’t expect. From super returns for retirement of 9.4%* p.a. over 10 years for our High Growth option, to expert super advice and guidance for right now. We are committed to helping our 1.1 million members get more from their super, so they can get more for their future.
 

^{^} Visit www.aware.com.au/awards for awards information.

^* High Growth option to 31 March 2023 after investment fees and costs and tax on investment income. Top 10 in the SuperRatings Fund. Crediting Rate Survey SR50 Growth (77-90) Index (46 options) over the period. Past performance is not an indicator of future performance.