Only half of pre-retirees are feeling confident about their post-work life according to research from Investment Trends, a significant drop off from last year’s result of 75 per cent.
This is among the findings in the researcher’s 2022 Retirement Income Report, but Investment Trends research director Dougal Guild tells Professional Planner 2021 was the anomaly.
“Last year was a blip in terms of the historic trend,” Guild says. “We’ve seen the confidence level and preparedness level remain steady at around 50 per cent.”
“It’s very consistent over the last decade… around that 50 per cent mark and this year we’re at 51 per cent.”
Non-retirees expect their retirement income to be around $3,200 per month but perceive $4,300 per month as the desired level.
Some 47 per cent expect to outlive their retirement savings and concerns about the cost of medical treatment have increased from 32 per cent last year to 43 per cent in the current survey.
Unsurprisingly, inflation has returned to the forefront of the minds of Australians which has increased as a concern from 28 per cent to 42 per cent.
“When you look at investor sentiment and consumer sentiment, it very closely tracks what’s happening in the global investment markets,” Guild says.
“The time of the survey last year, super funds had a solid year and markets were solid. Roll forward 12 months and there’s a move to a negative overall return in the market for most investors.”
Product concerns
The research found that many Australians are unaware of the retirement income products offered by their super fund or unconvinced of their worthiness.
The most essential features non-retirees desire for their retirement products are longevity protection, guaranteed minimum income and flexible access to funds.
However, many who value these features do not know they exist in current offerings with only seven per cent of non-retirees being aware of a retirement income product that provides protection against market falls.
However, the fear of not having enough money to retire is driving non-retirees to seek retirement-related information and wanting to be better prepared.
Solace in the covenant
The obligation for super funds to publish their Retirement Income Strategy appears to be delivering positive outcomes with super funds remaining the most used source of retirement information (63 per cent), followed by financial advisers (33 per cent).
“Because the super funds have had to engage with their membership in relation to how they plan to support the retirement income covenant, there’s additional information on websites and annual statements,” Guild says.
He added the Retirement Income Covenant has been a “good trigger” for engagement to get consumers thinking about retirement.
Non-retirees also shared that they are seeking enhancements around projections of the cost of living for different lifestyles, expected weekly income, and inflation adjustments.
The study suggested retirement calculators and financial advice have been found “to elicit repeat engagement and can be great digital conversation starters”.
