Strapped for cash in retirement
Most Australians will be short of cash at retirement age, statistics from the Financial Services Union reveal.
The analysis found a male aged 47 years and earning $87,500 will retire at 67 years with $98,000 in super – short $432,700 on the amount he'll need to live comfortably in retirement.
The figures are more daunting for women – an 18-year-old female earning $34,507 will take a five-year break before retiring at 67 years with a shortfall in her retirement savings of $771,200.
However, apparently worst off are males and females aged 25 to 29 years, who by the time they reach retirement, will have a much greater average life expectancy than older generations.
Financial Services Council chief executive, John Brogden, says every five years life expectancy increased by one year, excluding medical breakthroughs.
“The number of people who live beyond a century will grow exponentially, that is people who will retire at about 65 and live for another 35 years,” he says.
“So you're looking at a situation where more and more people will be retired for the same amount of time they worked. Our system hasn't been geared for that.”
Mr Brogden urged government to consider revising the current superannuation preservation age of 60 years, when a person can access their super.
Many Australians have to wait seven years from the time they retire to the time they can access the age pension.
Superannuation Minister, Bill Shorten, last week held talks with industry representatives to discuss post-retirement policy issues to address this savings shortfall.
Mr Shorten said new laws to increase the universal superannuation rate from nine to 12% were a step forward.
“Those of us over 65 now are only three million in number, but by 2050 there'll be 8.1 million of us,” he said.
Are you worried about being short of cash when you retire?