Cost of living fears have Australians underestimating how long their superannuation would last and over-estimating costs, leading to a more anxious retirement.
New figures by Challenger and YouGov found just 52 per cent of Australians aged 60 plus say they are financially secure in their retirement.
Challenger chief executive customer Mandy Mannix says older Australians are worried about the impacts of rising cost of living, financial security and running out of money in retirement and simply struggling to spend in retirement.
“Today’s retirees are the first generation having built significant superannuation savings. Yet, after decades of focusing on saving, many retirees find it surprisingly difficult to switch to spending once they retire,” she said.
According to Challenger’s results, two in three pre-retirees now say rising cost of living has affected their financial security.
A further 57 per cent worry about being able to maintain their lifestyle, while 46 per cent fear they’ll run out of money at some point in their retirement.
Women and pre-retirees are mostly likely to fear not having enough money at the end of their working lives.
“The key is having the certainty to relax in those golden years, knowing your money will last and that you can afford to enjoy what retirement has to offer.
Adding to retirees woes is an overestimation of just how much they will spend a year in their later years.
On average, Australians aged 60 and over believe they will need at least $70,398 per person in retirement or about approximately $1,350 per week.
This is higher than the ASFA Retirement Standard that recommends $54,840 a year ($1,055 per week) for a comfortable lifestyle for a single person.
NED-9108-Monthly-Inflation-Indicator
Australians have never been less confident
The mood of retirees matches cost of living pressures felt across the greater economy.
ANZ-Roy Morgan figures show consumer confidence has collapsed to its lowest level since the research began in 1973.
Consumer confidence fell 5.4 points last week to 63.1 points. The four-week moving average fell 4.3 points to 70.5 points.
Australians now feel lower about their finances than during previous recessions, including the 1970s oil shocks, the dotcom bubble burst, the global financial crisis and the Covid downturn.
A score of 100 or above suggests households are optimistic about the future.
ANZ economist Sophia Angala says consumer sentiment has been hammered by a combination of soaring oil prices from the Middle East conflict and the RBA’s decision last week to increase the cash rate to 4.10 per cent.
”With very large increases in petrol prices through March, inflation expectations rose to its highest last week,” she said.
“Household confidence in their current and future finances weakened sharply, as did the ‘time to buy a major household item’ subindex, which is at its lowest since late March 2020 when pandemic lockdowns were announced.”
Happiness rises despite cost of living pain
Even if Australians are worried about running out of money, the majority say they live a happy pre or post retirement life.
Challenger Retirement Happiness Index score rising to 69.5, up from 68.9 the year prior.
According to the data those who volunteered were among the happiest older Australians, while being married and being a homeowner also added to retirees happiness.
Retirees also said having activities and hobbies, a sense of purpose and physical and mental health in their latter years were the biggest drivers towards happiness.
“One of the strongest insights is the powerful role purpose plays in retirement happiness. People who volunteer, stay active in their communities, and maintain hobbies and interests consistently report higher levels of happiness,” Ms Mannix said.
https://thewest.com.au/business/cost-of-living-fears-forcing-australian-retirees-into-a-poorer-retirement-c-22128229
