Superannuation predictions shock the younger generation!

 September 8, 2021

By  Chase Edwards

A survey was done of young Australians, ages 26 to 35, regarding their ideal retirement.

At age 40, I would like to retire. Logan, 26, wants to book an international first-class ticket and not have to consider the price.

It was important to Beth, 29, to enjoy the trip and feel relaxed, while it was important to Nikki, 34, not to rely on the aged care pension but to rely on herself.

Millennials were asked questions about their financial affairs while standing in front of a series of circles leading to a red line.

Their chances of experiencing financial stress in retirement increased as they got closer to the red line.

Nevertheless, participants were floored by a piece of advice.

The experiment’s financial advisor, Ellie Fordham of Brisbane-based financial planning firm Dozzi, explained that, for a single person to be debt-free and not rely on the aged pension, they would need close to $1 million in retirement assets.

Ellie has had young people reach out seeking advice on what to do to make sure they aren’t struggling during retirement. Picture: Supplied

In response to the $1 million figure, Joshua, 27, said, “It’s a bit of a wake-up call.” he added.

Even after working full-time in a stable job for 30 years, Ben is not sure he will achieve that.

It was Mum Beth who was most alarmed. The fact that I am the closest to the line among everyone here makes me petrified,” she said.

Ms. Fordham told millennials they needed $545,000 per person and $640,000 per couple to retire comfortably, but there was one catch. The pension would waive the rent payments only if the pensioner did not have to pay rent, but even then, they still would need to rely on the aged pension.

“My current super balance is just over $100,000 and being 29 I feel like I’m getting pretty close to that $500,000 I’ve got to have,” said Eva.

For Joshua, however, the story was different. I’m here because I’m not financially prepared yet, I don’t have adequate retirement funding. My balance is likely to be around $20,000 at my age, which is scary.

At one point in the experiment, all the women in the room were asked to take a step forward.

“How does it make you feel to already be at a disadvantage because of your sex?” asked Ms. Fordham.

She revealed that women’s super-balances are typically 40 percent lower than men’s.

“Being a single parent and staying at home (for) six to seven years, that takes a huge chunk out of retirement benefits, so I have a lot of catching up to do,” said Beth.

In addition, participants who were renting and trying to break into homeownership were also encouraged to participate.

“All the house prices jumped right up and that sort of scared me off,” said Eric, 26.

“I’m living at home, but I would like to buy my own home (but) trying to afford a house right now is crazy,” added Joshua.

Mrs. Fordham explained that homeownership is a major factor in young people’s retirement.

“The number of homeowners under 35 has declined by half since 1995, and the majority of the properties are now owned by seniors 65 and older, which is concerning when you consider the importance of having a home for a comfortable retirement,” she said.

In addition, those earning less than $62,500, withdrawing super money early, or planning to take at least six months off of work were asked to make the move.

According to Ms. Fordham, the rise of the gig economy is likely to have a major impact on millennials’ retirement.

By 2025, 75 percent of the workforce will be made up of millennials, she stated. Currently, less than half of Australians are in permanent full-time employment. This trend of millennials not contributing to their super fund when the gig economy is on the rise is really concerning.”

Participants were also encouraged to come forward if they didn’t make any extra contributions to their super – with Ms. Fordham suggesting that this was a good first step for millennials to get ahead with their super.

Logan was the only one confident about his retirement at the end of the experiment.

He said he’s “100% on the right path,” and that all his mother taught him has translated to success.

There’s a massive gap between the amount we have and what we should have, this is a proven fact.

Thankfully, our team is fully equipped to handle all and any of your retirement planning needs. For a safer and more fulfilled transition into retirement. While we all wish to go into early retirement, you need a plan to make sure that this is achievable

To learn more about the ways to make sure you are completely equipped to retire the way that you want to, contact our team of specialists today!

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