Retirement expectations don’t match savings
A report says the government will save if it increases the superannuation guarantee from 9 to 12 per cent.
Australian’s retirement expectations have changed dramatically over the past century but their savings have not kept pace.
The 24th AMP.NATSEM Income and Wealth Report shows that older Australians are working less and spending more time in retirement than ever before.
The launch of the report comes 100 years after the introduction of the age pension in 1909. Back then, only about half of all Australians reached the age of 65 but now we expect to spend 20 years in retirement after reaching the ‘old age’ milestone.
According to the report, Australians will need to have significant savings or a high retirement income to maintain their standard of living in retirement.
Using a NATSEM simulator, the report considers the effects of raising the superannuation guarantee from 9 per cent to 12 per cent.
Such a move would boost the average superannuation balance but there would still be a gender gap between men and women.
The increase in super contributions would also reduce the government’s age pension burden by 2.3 per cent.
“Australians have very high retirement expectations but we are not saving enough to even afford a comfortable retirement let alone one that meets our expectations,” said the managing director of AMP Financial Services, Craig Meller.
“Adequate retirement funding is a critical issue that needs to be managed and increasing the [superannuation guarantee] to 12 per cent would significantly lift the adequacy of future retirement savings.”
The report also highlights the need for greater self-reliance from Australians as they age.
