Over 40’s bullish on retirement outlook, expect retirement savings to last longer

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Despite feeling prepared for retirement there are lingering concerns for retirees.

Leading research firm Investment Trends has launched its 2021 Retirement Income Report, an in-depth study of Australians’ attitudes towards retirement and post-retirement issues.

The latest Investment Trends Report highlights a surging proportion of pre-retirees feel very well prepared for retirement (16%, up from 10% in 2020). Another 45% are feeling ‘somewhat prepared’ (up from 36%) and the proportion of pre-retirees concerned about having enough money for extras while in retirement has returned to pre-pandemic levels.

Despite feeling prepared for retirement there are obvious lingering concerns for retirees. Whilst illness is still top of mind (56% cite this), on the rise are worries about regulatory changes around superannuation, rising twofold in the past year (41%, up from 19% last year). “We are seeing the prospect of regulatory changes impacting peace of mind for many Australians either heading towards or in retirement.” said Kurt Mayell, Associate Research Director at Investment Trends.

Pre-retirees believe they will need on average $4,500 per month for a comfortable retirement while they expect to receive $4,100 (a 10% gap, down from 37% last year). This gap between anticipated and ideal retirement income has significantly narrowed, demonstrating that retirees are feeling more comfortable with their levels of retirement savings.

“For the first time in five years, one in two retirees expects their retirement savings will outlast their years in retirement. As of September 2021, pre-retirees expect their savings to last on average 22 years, seven years longer than only a year ago.” said Mayell.

“With an improved retirement outlook more Australians say they would eventually like to leave the balance of their super to their heirs, welcoming increased estate planning advice and content.”

The proportion of Australians aged over 40 who say they have enquired about estate planning spiked over the past 12 months (50% up from 31% in 2020). Those who do not yet have an estate plan would welcome information about a range of topics, particularly superannuation death benefits and tax implications (54%), and wealth preservation (52%).

The family home is the main asset people intend to pass on as inheritance (80% cite), followed by non-super investments (62%) and super (53%).

Whilst Australians overall sentiment toward retirement is looking positive, when the time comes to access the right retirement solution for them, many are largely unaware of the retirement income products offered by their main super fund or are unconvinced those on offer are fit-for-purpose. “There are enormous opportunities for super funds to provide clarity about the pension products and strategies they offer, suggesting the developing Retirement Income Covenant seems to be taking shape at just the right time.” said Mayell.

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