Financial security, stress worsens since COVID: AMP

The latest Financial Wellness report from AMP has revealed levels of financial security and stress have worsened since those recorded among working Australians in the midst of the COVID-19 pandemic.

According to the research, only one-third of adult working Australians said they felt financially secure, down from 50 per cent in 2020 at the height of the pandemic. Since 2020, the number of people at several levels of financial stress had all increased, with 42 per cent in mild financial stress, 15 per cent in moderate financial stress and eight per cent in severe financial stress, as of 2024.

The report also found that more Australians feeling ‘severely’ or ‘moderately’ stressed had received help from family and friends to make financial decisions (one-third) compared to assistance from their super fund (one in nine) or a financial adviser (one in 20).

“It’s clear more Australians aren’t feeling secure with their finances, not surprising given cost of living pressures and housing unaffordability challenges.” AMP Bank Group Executive, Sean O’Malley, said.

“And while the research tells us that most are meeting their mortgage repayments, we know that savings rates are down and many are cutting back expenditure on household basics such as groceries, and other more discretionary items such as streaming services and holidays.

“Amid these cutbacks, it’s also evident that many aren’t taking advantage of the support available to them, with a tendency to bottle up their financial worries, in-turn impacting their mental wellbeing.

“We’d encourage more Australians to explore the options available to help them feel more in control of their finances. From a home loan perspective, this could be contacting a bank or broker to see if there is a better rate available on their loan, or different features which are better suited to particular circumstances. What seem like small things can make a big difference.”

The survey of 2,475 Australians who were currently employed, unemployed, retired and small business owners also indicated that they are exhausting all possible avenues to save money on ‘non-essential services’ by drawing down on accumulated savings and reducing their everyday spending: 60 per cent spent less on groceries, 40 per cent forewent a holiday, 33 per cent spent less on regular hobbies and interests and 33 per cent have cancelled streaming services subscriptions and gym memberships.

More than half of Australians surveyed agreed that cost of living expenses will continue to rise, with less than 33 per cent expecting to be financially stable in the next two years. This has suggested that long-term financial planning has been “compromised” due to the necessary adjustments made to survive in the short-term. One in three respondents said they are never or rarely planning for their financial future.

The data also presented a concerning statistic, in that moderate-to-severe stress levels among those aged 55 to 59 jump sharply to 40 per cent, from the approximately 25 per cent of those aged 51 to 54 reporting moderate-to-severe financial stress. This generation of Australians in the pre-retirement age had the highest levels of stress compared to the other age groups in the survey, with the ‘fear of running out’ (FORO) a major concern as cost of living expenses deplete retirement savings.

“What’s also apparent from the research is that with a focus on paying the bills and keeping their heads above water, more Australians are understandably planning and thinking less about their longer-term financial goals.

“The wonderful thing about Australia’s compulsory superannuation system, is with Australia’s high employment levels, most are continuing to automatically build their retirement nest eggs. While Australians should take comfort from this, there is more to be gained from our superannuation system.

“At AMP, we offer our members the ability to get close to your super and feel more in control of their financial circumstances, with digital tools and simple advice available at no extra cost. We also offer a ‘Retirement Health Check’ with dedicated financial wellbeing support available for customers, at no extra cost.

“Services like this can help more Australians optimise their super, gain valuable insight into the magic of compound interest and how just a little extra contributed now can multiply in value over the long term.”