Australians are increasingly concerned that their savings will not be enough in retirement, with the majority fearing they could run out of money before they die.
According to a recent study, four in five working-age Australians believe they have a 40 percent or greater chance of not reaching their savings limit in retirement. Daniel Shrimski, Managing Director of Vanguard Australia, calls the fear of outliving one’s retirement savings “FORO – fear of running out.”
According to research by Vanguard, 30 percent of working-age Australians expect to have a mortgage to pay during retirement, while one in five retired Australians currently rent.
“When it comes to pensions, this is a rather unresolved problem,” said Mr Shrimski.
“We tend to assume that we will soon own our own home and be mortgage-free – but unpaid debts or having to dip into savings to pay rent are likely to be a major financial burden for many, especially when full-time employment is no longer an option.
“That’s why it’s so important that a strong superannuation fund is part of a comprehensive retirement plan so that Australians can have confidence and security in retirement.”
However, the research also found that half of all Australian retirees did not know how much money they could spend each year to ensure their savings did not fall by the wayside. And 67 percent of all Australians had not thought about or did not know what age they needed to plan for in retirement.
The cost of living is a top priority for many retirees: 42 percent said their household financial situation had worsened compared to 12 months ago, and 96 percent of this group believed that rising living costs were having a negative impact on their household’s financial situation.
Mr Shrimski said with rising costs “in all areas of our lives”, many Australians already feel they need to save more to be able to afford a comfortable retirement.
He said it was “very worrying” that the most popular source of retirement planning information and advice, according to the research, were free online sources such as Google, because “quality financial advice can make a real difference to Australians’ retirement prospects and experiences.”
“The more Australians know, the better they can plan their desired lifestyle and the more confident they will feel,” Shrimski said.
“When it comes to confidence in retirement planning, research continues to show that planning and
Access to a financial advisor gives Australians a much better chance of a successful
Retirement.”