Sobering new research commissioned by Commonwealth Bank of Australia (CBA) reveals just 53 percent of Australians will enjoy a comfortable retirement. This figure considers the value of household’s combined superannuation savings, personal assets, and the Age Pension.
As if this wasn’t scary enough, there are no guarantees the Age Pension will remain at its existing levels. If the Age Pension is removed from the equation, just 17 percent of Australians could afford a comfortable retirement, according to the CommBank Retire Ready Index.
If you think you could survive on your superannuation balance alone, you’re probably wrong. Just 6 percent of Australians could fund a comfortable retirement with their superannuation balance alone. That’s largely because many Australians take a “set and forget” approach to superannuation and only engage with super near the end of their working lives, according to Linda Elkins, the CBA executive general manager of advice.
“But taking a keener interest in superannuation now, consolidating accounts into one super fund and contributing a little more each week can help younger Australians stay on track for a comfortable retirement,” she told Money Management magazine.
But what about older Australians? Ms Elkins admits that Aussies aged from 60 to 64 aren’t as retirement ready as their younger peers, because they haven’t received the long-term benefits of compulsory employer superannuation contributions. However, making efforts in the years before retirement can make a significant impact. It’s never too late.
Ms Elkins also noted that older Australians usually have more assets at retirement outside superannuation, which can bolster their finances after leaving the workforce. Younger Australians should make efforts to accumulate these assets, including property and shares, to diversify their retirement portfolios.
The CBA research also found men are typically more “retire ready” than women. That may be because more men are engaged with their finances, or because women have longer life expectancies, and thus need more money to maintain a comfortable lifestyle in their old age. Whatever the reason, the research shows women need to make more of an effort to grow their finances while they’re working to prepare for their golden years.
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