There are a number of factors that could significantly impact the road to retirement for Australians in the coming years. It’s important to identify the trends that may impact your own journey of post work / life, to ensure the transition to that next stage in life is as smooth as possible for you.
Being aware of the following may help you consider how much money you may need in your super to be ‘comfortable’ in retirement.
Life expectancy
Life expectancy for both males and females decreased for the first since the mid 1990’s in 2020-2022, according to the Bureau of Statistics. It was reported in November 2023 that:
- Life expectancy at both for males was 81.2 years and 85.3 years for females, a decrease of 0.1 years for both from the previous year (2019-2021).
- Over the past decade, life expectancy increased by 10.3 years for males and 1.0 year for females.
- The gap in life expectancy between males and females is 4.1 years.
- Around 30 years ago (1992), life expectancy at birth was 74.5 years for males and 80.4 years for females, a gap of 5.9 years.
The Association of Super Funds (ASFA) provides a good indication on how much money you will need to have in your super in order to live a comfortable level. This can be found here>>>.
Increased health and aged care costs
Health and aged care costs are growing significantly, due to higher standards of care and the fact that life expectancy means an individual may need care for a longer period of time. More and more people are entering aged care, and while the Government helps out, this can be an expensive outlay with many facilities requiring a lump sum payment up front to secure accommodation.
Increases to the age pension eligibility age
With any increase in life expectancy comes the increased pressure on the pension system in Australia. The current age of eligibility to receive the age pension is 67.
It’s likely as more and more Australians enter retirement, stricter income and assets tests may be introduced for those wanting to access the (full or part) Age Pension and thus it’s important to plan and self-fund your retirement where possible.
Gender inequity in super
Women currently enter retirement with an average 25% less in their superannuation than men do. There are reasons why this is the case including the gender wage gap, women taking time out of their working life to care for children or family members and a larger proportion of women work part-time. While there is hope that this gender super gap will decrease, it’s something you need to be aware of. It’s also worth knowing that even contributing small amounts to your super now could potentially have a positive impact on your account balance in the future.
Decrease in home ownership
We all know it’s generally not cheap to purchase a home and it was reported in the Sydney Morning Herald (on 27 September 2023) that more than half of retirees and older workers have mortgage debt. It‘s essential that if you’re renting or still paying off your mortgage, that you factor in the cost of continuing to pay off your mortgage (whether by a lump sum out of your super or progressively) or renting in your day-to-day retirement living expenses. Long term planning will help you effectively assess how you can enter retirement, with a level of comfort, even if you don’t fully own your home.
Increases in super from your employer
The Government has recognised the above factors will mean Australians will need to have more in their superannuation moving forward. As a result, the compulsory super your employer has to pay you is now 11.5% of your salary (as at 1 July 2024). While this increase may seem small, it has the potential to have a big impact on your retirement account balance in the long run.
It is important that you remain aware of the above factors and continue to research any other emerging trends, to ensure that you are well prepared to transition into a comfortable retirement when you want to.
If you need help, it’s always good to ask for it. A financial planner can help you review your current situation and provide you with options. If you don’t have a financial planner, reach out to the Financial Planning Association who as an independent body, can help put you in contact with one.
ii ASFA urges action to close the retirement savings gender gap - ASFA The Voice of Superannuation since 1962
There are a number of factors that could significantly impact the road to retirement for Australians in the coming years. It’s important to identify the trends that may impact your own journey of post work / life, to ensure the transition to that next stage in life is as smooth as possible for you.
Being aware of the following may help you consider how much money you may need in your super to be ‘comfortable’ in retirement.
Life expectancy
Life expectancy for both males and females decreased for the first since the mid 1990’s in 2020-2022, according to the Bureau of Statistics. It was reported in November 2023 that:
- Life expectancy at both for males was 81.2 years and 85.3 years for females, a decrease of 0.1 years for both from the previous year (2019-2021).
- Over the past decade, life expectancy increased by 10.3 years for males and 1.0 year for females.
- The gap in life expectancy between males and females is 4.1 years.
- Around 30 years ago (1992), life expectancy at birth was 74.5 years for males and 80.4 years for females, a gap of 5.9 years.
The Association of Super Funds (ASFA) provides a good indication on how much money you will need to have in your super in order to live a comfortable level. This can be found here>>>.
Increased health and aged care costs
Health and aged care costs are growing significantly, due to higher standards of care and the fact that life expectancy means an individual may need care for a longer period of time. More and more people are entering aged care, and while the Government helps out, this can be an expensive outlay with many facilities requiring a lump sum payment up front to secure accommodation.
Increases to the age pension eligibility age
With any increase in life expectancy comes the increased pressure on the pension system in Australia. The current age of eligibility to receive the age pension is 67.
It’s likely as more and more Australians enter retirement, stricter income and assets tests may be introduced for those wanting to access the (full or part) Age Pension and thus it’s important to plan and self-fund your retirement where possible.
Gender inequity in super
Women currently enter retirement with an average 25% less in their superannuation than men do. There are reasons why this is the case including the gender wage gap, women taking time out of their working life to care for children or family members and a larger proportion of women work part-time. While there is hope that this gender super gap will decrease, it’s something you need to be aware of. It’s also worth knowing that even contributing small amounts to your super now could potentially have a positive impact on your account balance in the future.
Decrease in home ownership
We all know it’s generally not cheap to purchase a home and it was reported in the Sydney Morning Herald (on 27 September 2023) that more than half of retirees and older workers have mortgage debt. It‘s essential that if you’re renting or still paying off your mortgage, that you factor in the cost of continuing to pay off your mortgage (whether by a lump sum out of your super or progressively) or renting in your day-to-day retirement living expenses. Long term planning will help you effectively assess how you can enter retirement, with a level of comfort, even if you don’t fully own your home.
Increases in super from your employer
The Government has recognised the above factors will mean Australians will need to have more in their superannuation moving forward. As a result, the compulsory super your employer has to pay you is now 11.5% of your salary (as at 1 July 2024). While this increase may seem small, it has the potential to have a big impact on your retirement account balance in the long run.
It is important that you remain aware of the above factors and continue to research any other emerging trends, to ensure that you are well prepared to transition into a comfortable retirement when you want to.
If you need help, it’s always good to ask for it. A financial planner can help you review your current situation and provide you with options. If you don’t have a financial planner, reach out to the Financial Planning Association who as an independent body, can help put you in contact with one.
ii ASFA urges action to close the retirement savings gender gap - ASFA The Voice of Superannuation since 1962