Australians are becoming increasingly worried their savings will not last during their retirement, with the majority concerned they will run out of money before they die.
New research has revealed that four in five working age Australians believe they have a 40 per cent or greater likelihood of outliving their savings in retirement, with Vanguard Australia’s managing director Daniel Shrimski labelling the fear of outliving one’s retirement savings “FORO – fear of running out”.
The research, by Vanguard, found that 30 per cent of working age Australians expected they would still be paying off a mortgage during their retirement, while one in five already retired Australians were currently renting.
“This is a bit of a sleeper issue when it comes to retirement,” Mr Shrimski said.
“We tend to presume we’ll be homeowners and mortgage free – but having unresolved debt or needing to drawdown on savings to pay rent is likely to be a big financial burden for many, especially if full-time paid work is no longer an option,
“This is why it’s so important that a robust superannuation balance is part of a ‘whole of wealth’ retirement plan, so Australians can have confidence and security in retirement.”
However, the research found that half of all retired Australians didn’t know how much money they could spend per year to ensure they didn’t outlive their savings, while 67 per cent of all Australians hadn’t thought about or were unaware what age they needed to plan for in retirement.
Cost of living was found to be front of mind for many retirees, with 42 per cent reporting they had a worse household financial position compared to 12 months ago, and 96 per cent of that cohort believing rising living costs had a negative impact on their household’s financial position.
Mr Shrimski said with rising costs “in all aspects of our lives”, many Australians were already thinking they would need to save more to afford a comfortable retirement.
He said it was “very concerning” that the research found the most popular source of retirement information and guidance to be free online sources, such as Google, because “quality financial advice can make a real difference to the retirement outcomes and experience for Australians.”
“The more Australians know, the better they can plan for the lifestyle they envision, and the more confident they will feel,” Mr Shrimski said.
“When it comes to retirement confidence, the research continues to show that planning and
having access to a financial adviser gives Australians a much better chance at a successful
retirement.”
