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Govt super policy shifts spooking retirees

Mike Taylor7 December 2021
Figures of old man and woman on top of coins

In what represents a turnaround in sentiment about retirement preparedness, the latest Investment Trends research has found that two-thirds of Australians aged over 40 feel prepared for retirement.

However, Government policy shifts around superannuation appear to have spooked many pre-retirees and retirees.

The Investment Trends 2021 Retirement Income Report has nonetheless identified that pre-retirees feel they need advice in actually securing a comfortable retirement.

The report, published today, reveals a significant uptick in Australians who feel very well prepared for retirement (16%, up from 10% in 2020) with another 45% feeling ‘somewhat prepared’ (up from 36%) and the proportion of pre-retirees concerned about having enough money for extras while in retirement returning to pre-pandemic levels.

However, it noted that despite feeling prepared for retirement there were 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),” it said.

Investment Trends Associate Research Director, Kurt Mayell said the research suggested the prospect of regulatory changes was impacting peace of mind for many Australians either heading towards or in retirement.

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.” Mayell said.

“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.

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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