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Australians fear they don't have enough for retirement
Thu, 25th May 2023

Despite the compulsory superannuation guarantee being over 30 years old in Australia, a worrying majority of Australians (2 in 3) fear they will not have sufficient financial resources to retire, according to new research from Findex.

The research from YouGov commissioned by Findex, one of Australasia's largest privately owned providers of integrated financial advisory and accounting services, explored Australians' preparedness for retirement and how professional financial advice factors into this. 

The survey of over 1,000 participants focused on those in the early planning stages of retirement to those in the process of retiring* across metro and regional areas. 

The older, the more unprepared 

Set against uncertain economic environments and frequent interest rate hikes, Findex's findings showed the closer Aussies were to retirement, the less confident they were about having the funds required. The majority (52%) of Baby Boomers and 38% of Gen X noted they were not confident of having the money needed to retire compared to 31% of Millennials.  

"This paints the picture that most Aussies have adopted a kick it down the road mentality to retirement," says Findex Co-CEO Matt Games. 

"But when the time eventually comes, they are faced with the reality that their existing savings and superannuation balance are insufficient in this economic climate," he says.

According to the Association of Superannuation Funds of Australia Retirement Standard a retiree today needs upwards of AUD$500,000 in their super balance. This sits well above the national average of AUD$356,000 and $288,000 respectively for men and women in their early 60s.   

Pairing with this, Findex's research also revealed one in two Australians don't believe they have a good understanding of the financial resources needed for a comfortable retirement. Gender disparity was additionally apparent in financial literacy where women were more likely to report their financial understanding as poor (27%) compared to their male counterparts (15%). 

Never too late for professional advice 

In terms of seeking professional advice to prepare for retirement, while 80% believe professional financial advice could benefit them in retirement only 30% had sought advice, with women (24%) less likely than men (37%) to have received professional advice. Furthermore, the closer respondents were to retirement age, the less likely they were to consider professional advice (unlikely to get professional advice: 49% Baby Boomers, 34% Gen X, 22% Millennials).  

"The time to access advice is now especially when many are currently struggling to manage their finances," says Games. 

"What our financial modelling shows is it is never too late for someone to benefit from advice, even if you're less than ten years away from retirement, and this holds true for people at most income levels," he says.

"Seeking professional financial advice should be viewed as good life hygiene like scheduling a dental check-up with a qualified dentist. And with the cost of living continuing to increase and Australians living longer, the reality for most people particularly women is not doing anything today will actually cost you. 

"Most Aussies simply wont have the funds they need to live a comfortable retirement if they don't take a proactive approach to secure their financial future."

But what is stopping Aussies from getting advice? 

The main misconception uncovered in the research centred around the common perception that the cost of financial advice was too expensive and outweighed the potential returns. Of the barriers stopping Aussies from getting advice, 34% cited the cost of advice, 32% don't feel they earn enough to make it worthwhile and 19% said procrastination.  

"It is very common for us in the industry to hear that cost for advice is the issue. But at Findex, we want to dispel this," says Findex Head of Investment Relations Matthew Swieconek. 

"a financial adviser doesn't only provide guidance on investment strategies that align with your goals and risk tolerance. They provide behavioural coaching, asset allocation research and management and tax savvy planning areas that DIY investors can often overlook and can add enormous value to wealth creation over time," he says.

"Quantifying this, our projections demonstrate the value of advice where Aussies stand to gain 8% to 29% in benefits depending on the age they start.

"While there is clear appetite and need for advice, to help Aussies unlock their full financial potential Findex is addressing the concerns around cost and value head on through offering tailored pricing structures, transparency and consistently demonstrating value all of which is underpinned by acting in the best interest of the client."