Written by Kris Wrenn
Although perhaps just a sign of the times, a recent study by AMP on financial wellness has shown that an increasing amount of people are not confident that they will have enough funds for a comfortable retirement, compared to one year prior.
The main outcome of this study suggested that more people do not believe they will have enough wealth accumulated, that they will struggle to meet expenses, and that a result of all of this, will not be able to do the things they want to do in retirement.
Concerns in the current climate.
Only 41% of those surveyed expected a comfortable or lavish retirement.
Almost 50% of those surveyed in their 50s were extremely worried about rising inflation. As I say, perhaps just a sign of the times, as you cannot pick up a newspaper without reading about the cost of something or other having risen. And let’s face it, as with interest rates, it doesn’t look like prices will be falling any time soon.
When will I retire?
When asked at what age they expected to retire, the average response was 65.4 years. This certainly gives rise to concern given that the Government has increased the age pension entitlement age to 67 so, if accurate, it leaves a window of 1 year and 7 months where the employment income stops, but no Government assistance is provided, and a larger amount of retirement assets may need to be accessed, especially if those retiring were hoping to celebrate with a holiday, or car/caravan purchase etc.
How much do I need?
When those surveyed were asked how much they expected to have in savings come retirement, the average response was $400,000. But perhaps more importantly, 41% answered that they didn’t know how much they needed to retire with. The truth is, there is no answer to this question and it is incredibly case-specific when it comes to how much you need to retire.
Focus on the positives
One of the biggest changes with this survey was that the number of people surveyed that said that they were choosing to set financial goals has risen from 17% to 34%, a huge 100% increase from the previous survey. This is a great sign that more people are putting a higher importance on their finances and their future income needs and it’s ever more important as we continue to live longer and as our population grows.
What can you do?
One unfortunate statistic was that 61% of responders said that they would choose to continue to work longer rather than reducing what they to spend in retirement. Although sad, I have to say I would probably give the same response. Retirement should in all rights be a form of celebration and a change into a new life cycle, just as we transition from education to the working life. It’s never too late to make positive changes to your financial situation and if you want to review your financial situation and forecast your retirement income please get in touch and speak with a Hudson adviser.