Ageing and retirement 2019-style

Ageing and retirement 2019-style

We’ve learnt a lot in the last year about what life looks like for older Australians, particularly in relation to retirement funding and planning.

Here’s Smooth Retirement’s snapshot of the Australian retirement landscape as we come to the end of 2019 and head towards a new decade in 2020.

They’re worried

The vast majority of Australians (70%) are worried about having enough money in retirement and outliving their assets.1

Surprisingly, finances rate as a much bigger concern for retirees than their own health.1

They have no plans

Despite being concerned, 64% of Australian retirees have made no plans whatsoever for their retirement and only 24% have sought professional help and advice.1

Of those over 65 years who haven’t sought advice, 50% report they have no intention of doing so and will not use the services of a financial adviser.2

They’re living longer

Lack of planning is even more sobering considering we are living longer than ever and will spend a third of our life in retirement.1

Since the Commonwealth Age Pension was introduced in Australia in 1909, life expectancy has gone up 25 years for men (80.5) and 26 years for women (84.6 years). Age Pension eligibility age however has increased by just one year for men and six years for women.3

They have little in savings

But with at least a third of Australians having less than $50,000 in total savings for retirement, this is likely to put even more stress on the Government to provide support for our ageing population.1

The numbers are growing

Some 1000 Australians retire every day 2 and within the next 12 years, 20% of Australians will be over 65 – an increase of 3.6 million to 5.7 million.4

By 2029, 90% of Australia’s 5.3 million Baby Boomers are forecast to have retired, creating a knowledge exodus and potentially creating millions of job vacancies in Australia.5

They’re a big cost to Government

Australia’s rapidly ageing population is putting increasing pressure on the public purse with the Age Pension already a big budget item, totalling $50 billion per annum.6

Continuing to support older Australians by funding pensions and aged care into the future is a growing concern for Government. As more Australians live longer, the number of working age Australians (i.e. taxpayers) for every person aged over 65 diminishes. It’s already dropped from 7.4 to one (1974-75) to 4.5 to one (2014-15) and is predicted to drop even further over the next four decades to just 2.7 to one.7

Compare those statistics to the fact that more than 255,000 Australians who own homes worth more than $1 million and 300,000 retirees with homes worth more than $2 million are living on taxpayer funded pensions totalling some $6.3 billion per annum.6

They own a lot of property

Property made up 70% of assets of those dying aged 65-84.8

Just over half (or $6.3 trillion) of Australian household wealth is stored in housing, distributed across 10.3 million residential dwellings, which are among the most expensive in the world.8 Australian seniors make up approximately 15% of the population 9, and are estimated to hold some $945 billion in real estate.

An estimated 4.5 million retirees’ home equity is worth four to five times their super. That is staggering considering the average super balances are $150,000 for males and $80,000 for females.10

They’re a neglected market

94% of Australians over the age of 50 dislike the way brands, organisations and marketers communicate with them.11

They’re big spenders

The over 50s Australians outspend millennials in entertainment, auto, health, travel and almost every other category.11

Australia’s over 50s make up 27% of Australia’s population; hold 50% of our private wealth; 46% of disposable income; buy 64% of all cars; buy 55% of all travel and 50% of all alcohol.11

We’re likely to follow the US – and still be paying for adult kids

More than half of Americans (53%) are supporting adult children which is negatively impacting on their retirement planning.12 Anecdotal evidence suggests Australians in their 50s, 60s, and 70s are facing similar challenges.

Women retirees are most vulnerable

Single older women with low education who rent their home could expect to live 7.7 years of retirement in financial hardship (e.g. unable to heat the home, missing meals, or pawning items), whereas women with similar characteristics but who owned their home could expect to spend half that (3.85 years).8

Smooth Retirement Pty Ltd provides equity release broking and retirement income planning Australia-wide. ABN: 46 619 010 445; AFSL 510015; Australian Credit Licence: 510015;;; 1300 510 015.

1 Franklin Templeton, Retirement Income Strategies and Expectations (RISE) Survey 2019
2 Alliance Retire, Survey 2019
3 IFA, Lifespan Financial Planning, Survey 2019
4 CBA 2019
5 Robert Half, Survey 2019
6 Australian National University 2019
7 Treasurer Josh Frydenburg, CEDA Speech, November 2019
8 ARC Centre of Excellence in Population Ageing Research (CEPAR) 2019
9 ABS 2017
10 Household Capital, Australian Financial Review, November 2019
11 Secrets and Lies: Ageless and Booming, WPP AUNZ agency, Lightspeed, November 2019
12 Unison Home Co-investing, Survey August 2019

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