Chris Grice

With inflation pushing living costs higher, covering daily expenses and planning for the future continues to be a major concern for older Australians, according to new research by National Seniors Australia and leading retirement income provider, Challenger.

The National Seniors Social Survey of 4,700 Australians aged 50 and over revealed that home ownership doesn’t guarantee financial security, with nearly 90% saying that relying solely on the Age Pension, without additional income, is insufficient for a basic lifestyle in retirement. Half of surveyed homeowners told us they would need $10,000 (singles) and $15,000 (couples) more than the Age Pension per annum to meet these needs. While the Age Pension provides a safety-net, the report highlights that older Australians need more for even a basic lifestyle.

Also an issue raised by respondents is the lack of appropriate information to help navigate retirement. Of those who hadn’t received adequate advice, 42% said they wanted to know more about aged care cost calculations followed by investment options (34%), and options to balance spending and saving (22%).

Chris Grice, Chief Executive Officer of National Seniors Australia, highlighted the growing concern among seniors that they don’t have the appropriate support to plan for retirement: “We found that calculating aged care costs was the topic most people wanted financial advice about. Older Australians feel anxious about the prospect of needing aged care and the unknown costs associated with it. We must ensure seniors are not left to navigate these challenges alone, without adequate guidance or resources.”

Aaron Minney, Head of Retirement Income at Challenger, commented: “Australians need help to best use their savings to live life to the fullest, at every stage in retirement. We’re living longer and it’s essential for retirees to plan for 30 years or more in retirement. With the right guidance, we can ensure that people are financially prepared for aged care when they need it, and can enjoy an active retirement, knowing they are ready.”

Paying for aged care has become a dominant concern for older Australians in 2024 with 60% of survey participants worried about how they cover these expenses while in 2021 Challenger and National Seniors research found that only 38% of people had thought about aged care costs.

Advice the golden ticket to retiring with confidence

Financial advice is associated with positive outcomes for Australians aged over 50 with 41% of respondents (who had already received financial advice) being more likely to feel financially comfortable, to be retired, and own their home outright. However, barriers for Australians in seeking financial advice remain, with cost, perceptions about the independence of advice and difficulty finding an appropriate adviser who meets their needs the main obstacles.

Close to half (46%) of those surveyed were interested in a lifetime income option for at least some of their retirement income. This compares to less than one in 10 Australians who currently have a guaranteed income stream, either directly through an annuity or as part of their (defined benefit) superannuation. One in five said they didn’t have enough savings to consider guaranteed income as an option.

“Lack of awareness and understanding about retirement income options has been a real challenge for Australians in or approaching retirement. Our customer research tells us guaranteed income provides peace of mind and significantly increases retirement happiness,” Mr Minney said. “Having a portion of your savings guaranteed to last a lifetime, brings an unparalleled sense of security. This is especially true in an environment of high and variable inflation and share market volatility, with retirees increasingly looking for ways to maintain their lifestyle and ensure they can enjoy their golden years without the risk of running out of money.”

Cost of living pressures and inflation are being unevenly felt amongst older Australians

Increasing living costs and inflation have created a divide among older Australians. Only half of those with less than $350,000 in savings feel financially comfortable compared to 84% of those with more than $350,000, highlighting a significant gap of 34%.

When respondents were asked how they would spend an extra $100 per week, one-third (33%) said they would save the extra money for later spending — such as a holiday or other big-ticket items — while another 29% stated they needed the funds for their everyday essentials.

Specifically, housing costs, including rent and mortgage payments, were a major concern for those feeling less financially secure.

“This research clearly shows that many older Australians are struggling to reconcile the cost of living with their retirement income. It’s not just about making ends meet; it’s about ensuring that retirees have the financial security to live with dignity and peace of mind,” Mr Grice added:

Read the report.

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Chris Grice

New research by National Seniors Australia and Challenger reveals the majority of older Australians are increasingly concerned over rising costs of living, with four in five reporting it had negatively impacted their lifestyle and wellbeing.

The National Seniors Social Survey of almost 6,000 people aged 50 and over unpacked how cost of living pressures are affecting lifestyle, retirement finances, wellbeing, and the financial security of older Australians.

The research revealed 53 percent are worried about outliving their savings, with those concerned about long-term cost of living struggles five times more likely to be concerned about longevity risk, the risk of running out of money late in life.

National Seniors Australia Chief Operating Officer, Mr Chris Grice said older people are thought to be protected from the more severe impacts of increasing living costs because they usually own their own home but that is simply not the case.

“The findings show the impact of increasing costs of living on financial wellbeing varies for people aged 50 plus,” Mr Grice said.

“The impact on older people’s financial security and quality of life varies depending on age, gender, partner status, health, wealth, home ownership and sources of income.

“The results are clear, increases in cost of living impact older people’s financial wellbeing when it comes to meeting expenses, being in control of finances, and feeling financially secure.”

Long-term impacts for the most vulnerable

Younger respondents, women and those in poor health are among those more likely to hold long-term concerns about the rising cost of living. Across all respondents, 83 percent believed lifestyle impacts would continue to be felt over the 12 months following the survey.

For most, managing their financial situation meant cutting back. Almost two thirds of respondents (62 percent) chose this as an option they could use to adjust to increasing cost of living pressures. Being able to afford essentials was the highest cause for concern, with health, energy, and grocery expenses the top three pain points.

Challenger Head of Retirement Income Research, Aaron Minney, said cutting spending is not a sustainable long-term strategy for older Australians to manage rising costs of living, with the impacts of this issue set to be long-lasting.

“An important factor for retirement wellbeing is having the financial capacity to maintain living standards that were enjoyed before retirement,” Mr Minney said. 

“In general, older people’s sense of financial resilience and financial security have fallen since the start of the pandemic and the increasing cost-of living has further undermined long-term planning and financial goal setting of older Australians.

“Certainty of income is vital to give retirees the confidence to spend and peace of mind that they have the financial security to protect their lifestyle, health, and wellbeing throughout their golden years.”

Retirees want money that lasts a lifetime

The fear of outliving savings is a growing concern amongst older Australians. The latest research revealed an increase in older people worrying over this issue compared to previous studies.

To manage this concern, 83 percent report that they want money that lasts a lifetime, with income that increases with inflation a top financial priority for most. Regular income for essentials (91percent) and being able to afford care and medical costs (86 percent) were also crucial to achieving long-term confidence.

“Financial wellbeing is critical to quality of life in older age and rapidly increasing living costs are undermining the financial wellbeing of retirees,” Mr Minney said.

“Finding ways to mitigate worry and give greater confidence that they will always have the income to meet these essential expenses will improve people’s wellbeing and quality of later life. A guaranteed and adequate income stream provides a lot of reassurance and comfort to older Australians battling rising costs.

“After nearly 30-years of relative stability in the cost of living, retirement planning and financial advice must better address the potential effects of inflation in undermining people’s control over their finances.”

Read the report.

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