Inflation might be surging and the cost of living rising but Australia is still one of the best countries retirees in the world, according to new global research.
For many people in Australia, 2022 has been a challenging year.
We’ve seen more COVID cases and deaths this year than at any point in the pandemic. A war in Europe has seen global energy prices skyrocket, and the associated rise in supermarket prices that goes along with it.
Most superannuation funds, the cornerstone of our retirement system, were unable to deliver a profit at the end of the 2021–22 financial year.
Read: How to avoid traps when retiring overseas
Life doesn’t seem too easy in the ‘Lucky Country’ at the moment.
But according to the 2022 Global Retirement Index, compiled by investment management group Natixis, Australia is the fifth-ranked country globally for retirement security and quality of life – up two spots from seventh position in 2021.
Louise Watson, Australia and New Zealand head at Natixis, told Money Management the super system was one of the major reasons Australia ranked so highly.
“The compulsory nature of Australia and New Zealand’s super industry creates a strong base from which government and investors can continue to partner to build progressive retirement systems,” she said.
Read: Why are older Australians delaying retirement?
“But investors need to be proactive and ensure their superannuation is best positioned to deliver long-term investment outcomes.”
The four countries that ranked above Australia were all located in Europe: Norway, Switzerland, Iceland and Ireland. Our cousins across the ditch in New Zealand came in sixth.
Australia ranked fourth for spending power in retirement and ninth for access to quality health services.
The report also listed the most common mistakes Natixis believes people make when planning for retirement.
The top five were: underestimating the impact of inflation, underestimating how long you’ll live, overestimating income from investments, being too conservative with investments and setting unrealistic return expectations.
Read: Common retirement mistakes and how to avoid them
Ms Watson said the impact of rising inflation on purchasing power in retirement could not be underestimated, especially for those who don’t own their home.
“Inflation impacts asset classes in different ways, with interest-bearing securities and those investors who are retiring this year most affected,” she said.
“But we know superannuation is a long-term investment proposition, and through investment diversification and strategic asset allocations, investors can look to minimise these impacts and safeguard their retirement nest eggs.”
The Consumer Price Index (CPI), a key indicator of inflation, is sitting at 6.1 per cent, and is predicted to hit 7.75 per cent by the end of the year.
How do you think Australia compares globally as a place to retire? What else can the government do to help retirees? Let us know in the comments section below.
