The way the industry looks at retirement is out of focus, says Eraj Ghafoori, a behavioural economist at AustralianSuper. While financial factors form a solid objective baseline, they are only part of the retirement confidence kaleidoscope.

“Everybody in the industry is looking at how much money consumers are saving, what are their assets and liabilities, how much they’re spending, what’s in their super, what are their additional contributions – and then they project and compare them to basically predict whether you are confident or not,” Ghafoori says.

The problem with this, he laments, is that it focuses only on the “purely objective financial aspect”.

The concept of confidence is less about what you have, he says, and more about how it affects you.

“What we know from psychology and social science is that confidence is about how you feel about your abilities when wanting to do something or in a certain scenario or context,” he explains. “That was our quest – to understand confidence from a purely subjective perspective; [for example], $100 for me could hold a different value for you.”

The quest Ghafoori speaks of led to the “Retirement Confidence Index”, a study of 3000 superannuation members and non-members that aims to provide a holistic view of people’s perception of retirement.

“There are papers published almost every month talking about people who are financially OK, but not happy about retirement,” Ghafoori says. “There must be other factors, it’s not all about the money.”

The index was co-authored by Deborah Ralston, who is chair of the Self-managed Superannuation Fund Association and Liam Smith, director of BWA at Monash University. The study was completely fund agnostic, Ghafoori says, and provides a clean data set.

“By nature of the sheer size of AustralianSuper – 2.3 million members – about 8 per cent of [participants] are naturally our members, but the rest of them are members of other super funds, whether they’re retail or industry,” he says.

Ghafoori explains that the study looked at how consumers think and how they saw themselves in the future. Researchers found four “distinct pillars”, he reveals, with nine components within them, that predict confidence in retirement.

The results, he says, are important for advisers because they can apply across all life-stages.

“Obviously, the factors that are important in living happily or well are the same factors regardless of [life-stage],” Ghafoori says. “[Whether] you’re young or pre-retirement or retired it doesn’t really matter. If you have confidence in the life that you’re living, which is emanating from a range of factors pertaining to all humans, you can lead a happy and fulfilling life.”

Ghafoori will be speaking at the Conexus Financial Retirement Conference, at the Amora Hotel Jamison in Sydney on March 19 and 20.

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Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning.