Australians expecting to retire anticipate that they’ll need an annual income of six figures annually, but the perception of how much is needed in retirement shifts as people get closer to retirement, according to research from Vanguard.
The ‘How Australia Retires’ report on Thursday morning, which revealed that this attitude contrasts with current retirees who are happy to live on a significantly smaller amount.
Vanguard head of super Shannon Nutter tells Professional Planner people often overestimate how much they need before they retire.
“Before they’re retired, people often think they need a little more,” she says.
“Once you talk to retirees, they’ve already figured out how to live with the income that they have and so you do see a bit of a difference.”
The research found working-age Australians yet to retire say they want an average annual income of $99,000 (based on current dollar value), in stark contrast to current retirees who are content with $68,000.
The current ASFA standard for a “comfortable” retirement is an annual income of $69,691 for couples and $49,462 for single adults.
“Along the lines of what we’ve seen, there’s more optimism among younger, working age Australians for what retirement could mean versus as folks get older,” Nutter says.
She also points to the different attitudes towards retirement ages which change as people age: 18- to 34-year-olds hope to retire before 60; 35- to 54-year-olds by 62; but people aged 55 nd older expect to retire by 65.
“There’s a level of optimism, but if folks have that goal [retiring early or needing more money] in mind, then taking the time to plan appropriately…what’s that going to take today? Having done that thought process will put them in a better place.”