Cost of living the top concern to retire comfortably: CFS

The latest edition of Colonial First State’s (CFS’) annual Rethinking Retirement report has found a drop in retirement confidence among retirees and pre-retirees primarily due to the cost of living.

The research, based on a survey of 2,250 Australians, indicated that the number of retirees who feel financially comfortable has fallen compared to last year, with 64 per cent now able to “comfortably enjoy retirement” – down from 71 per cent 12 months ago.

Of the respondents at the pre-retirement stage, 54 per cent said they do not believe themselves capable of retiring comfortably. For those over 50 years of age, this figure increases to 57 per cent.

Respondents also cited the cost of living as the “number one concern” that is affecting their expectations of comfort in retirement, with over 75 per cent of retirees having their pension payments taken up by vital costs such as groceries and utilities. Similarly, exactly 50 per cent of retired homeowners said they are also using their pension payments to save for unexpected emergencies or expenses.

Also, just under one quarter of retirees (22 per cent) have had to continue paying off debt using pension payments; among those who do not own a home, this figure rises to almost one third (30 per cent).

The report also emphasised the connection between financial advice and informed retirement decisions as advised respondents showed more confidence across several issues, including managing one’s own finances (70 per cent versus 58 per cent unadvised), overall financial situation (72 per cent versus 42 per cent unadvised), retiring debt-free (71 per cent versus 45 per cent unadvised), having enough money to retire (70 per cent versus 30 per cent unadvised) and achieving one’s financial goals (70 per cent versus 45 per cent unadvised).

The research also suggested that younger Australians were more open and willing to engage with a financial adviser in order to achieve their financial goals.

“The cost of living has shaken confidence in retirement expectations. However, it has also led to more people engaging with their super and seeking assistance with retirement planning,” Kelly Power, CFS Superannuation CEO, said.

“The findings once again highlight the positive impact of financial advice, with those who receive advice twice as likely to feel financially prepared and on track to reach their retirement goals.”