The report, “The Australian Retirement Vision Survey”, is based on a survey of 1,200 super fund and Self Managed Super Fund investors conducted with consultant Rice Warner.
The main findings:
· Across all age groups, six out of 10 Australians expect their current standard of living to remain the same after they retire. In fact many have high expectations for post-retirement incomes, suggesting a median income of $982 a week will be needed to maintain their desired lifestyle. This is significantly above the ASFA Retirement Standard of $443 a week for a modest lifestyle and $767 a week for a comfortable lifestyle. (pages 6-8)
· However four out of 10 respondents are not confident they will meet their target level of wealth for retirement or that their super will be sufficient to fund their retirement. More than half of respondents do not have any goals or objectives for retirement, revealing an overall lack of planning and strategy, particularly among younger investors and those with less financial knowledge. Only 43.8% have set clear goals. As a result, many feel they are not on track to achieve the retirement lifestyle they desire. (page 27-28)
· Despite the ongoing media focus on superannuation performance in the wake of the global financial crisis, the major concern for investors is not underperformance, but the potential for further change to superannuation rules. Two in five investors named changes to super legislation as their single greatest concern about their retirement savings. (page 6)
· Only 18% of Australians plan to withdraw their super as a lump sum to pay down debts, dispelling the myth that people tend to spend their lump sum before relying on the Age Pension. The remaining 80% expect to convert all or part of their super into an income stream in the form of an allocated pension or annuity, reflecting a growing trend towards more effective income planning. (page 12)
· Australians are conservative in their retirement investment strategy: less than half of investors surveyed are willing to take on even moderate levels of investment risk, significantly impairing their ability to reach their long-term lifestyle goals (page 18-19)
· Quality financial advice matters when it comes to achieving retirement goals: of the respondents who expressed confidence about this, almost half were receiving advice and one quarter were unadvised. (page 3)
· Investors want to interact with their advisers in a variety of ways, underscoring the need for flexible and scalable advice models that can cater to both self-directed decision-makers and more traditional holistic advice clients. (page 29)
· Female investors are in particular need of financial advice to overcome the gender super gap. The research shows that women tend to be significantly more conservative with an aversion to risk which has obvious negative implications for their retirement savings, which already tend to be lower than male balances. (page 19)
“As people generally stay healthier for longer, the retirement vision for Australians is changing, creating challenges for governments, product providers, financial advisers and superannuation investors,” Dan Farley, chief investment officer of SSGA’s Investment Solutions Group. “This research shows that while many investors are feeling more confident about their retirement prospects, there is still a significant proportion who are confused about super and uncertain about whether their investments will be able to sustain the lifestyle they aspire to leading in retirement.
“Now is a good time to educate workers about the nature of market cycles and how to develop a savings strategy they can stick with even when markets fluctuate. Our research underlines the value of professional advice in educating and supporting everyday super investors in setting and achieving realistic lifestyle goals, yet it also shows that many are still uncertain or unaware of the value advice can bring. This creates both a challenge and an opportunity for advisers.”
Mr Farley added: “The research also reaffirms that investors want to interact with their advisers in a variety of ways, underscoring the need for flexible and scalable advice models that can cater to both self-directed decision-makers and more traditional, holistic advice clients.”
Source: State Street Global Advisors
