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Retirement savings will not meet desired lifestyle
More than half of Australians expect to have a shortfall of almost $500,000 to live their desired lifestyle in retirement.
Such is the finding of a Mercer research, which showed 54 per cent will not have sufficient funds available to them for a comfortable retirement.
An online survey of more than 1500 people between 50 and 80 years old found a quarter of all respondents will outlive their retirement savings by 11 years, while as many as 10 per cent may have to rely only on the age pension for 15 years.
"Australia is facing a very real economic and social dilemma due to a lack of protection against longevity risk," Mercer managing director and Pacific market leader David Anderson said.
"Life might be simple but comfortable for the first decade or so, but once savings run out the age pension will only provide about half the amount required for a comfortable lifestyle, what happens when medical expenses increase or aged care is required?"
VicSuper CEO Michael Dundon said an adviser-led, income layering method to create members' retirement portfolio would be effective.
Senior actuary and partner at Mercer David Knox said the scale of the super sector must be leveraged to provide longevity risk pooling.
"The sharing of risk will lead to improved outcomes for everyone."
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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