Financial advisor Colonial First State (CFS) has released the latest iteration of its ‘Rethink Retirement’ report, unearthing some interesting findings. The report, published this month, shows that many Australians are embarrassed to seek advice about retirement. As many as one in 10 Aussies admitted to this aversion in the latest CFS survey.
Such a reluctance may help explain why, for many Australians, there is a disparity between how much they think they’ll need to retire and how much they’ll really need.
The 2024 edition of Rethink Retirement surveyed 2247 Australians, with the results summarised in a nine-page report.
According to CFS, the survey produced four key findings:
- Australians want flexibility and choice in retirement
- Australians benefit from greater engagement with their super and access to advice
- Advised Australians are twice as likely as unadvised Australians to retire at a time of their choosing
- Australians are generally enjoying retirement despite their concerns leading up to it
These findings suggest that Australians who put retirement plans into the ‘too hard’ basket may suffer in two ways. Firstly, their reticence reduces their chance of retiring when they want to. Secondly, they’re more likely to be experiencing unnecessary stress, produced by a lack of understanding. This lack of knowledge can in turn lead to heightened anxiety about what may or may not happen in retirement.
The ‘Rethink Retirement’ stumbling blocks
One element of the report not highlighted in the four key findings was a lack of understanding around pension eligibility. It is unsurprising that those who have avoided seeking retirement advice would lack that understanding.
But what is surprising is that, as pointed out by the Australian’s Anthony Keane, nearly two-thirds of Aussies approaching retirement lack that understanding. Why is this so?
The Rethink Retirement report indicates that about half of Australians access professional advice about retirement in advance. Of those, around two in five get that advice from their super provider and two in five from a financial adviser. The others (less than one in five) speak to their accountant.
As many as 18 per cent of Australians eschew professional advice, instead relying on family and friends for guidance. While there is no published correlation in the report, this may indicate two important factors. Firstly, getting professional advice may be the best way to achieve a desired retirement outcome. Secondly, make sure the professional advice is coming from the right professional.
This is not to suggest that accountants, or even family and friends cannot provide worthy advice. However, a registered financial adviser may have knowledge of the nuances of rules and regulations others don’t.
Colonial First State’s head of technical services, Craig Day, said the lack of knowledge around pension eligibility didn’t shock him.
“It’s not surprising, particularly when you consider that less than one in three understand retirement planning or how their life might change in retirement,” he said. “People are often surprised that they can have a substantial amount of income and/or assets and still receive at least a part age pension.”
A good news lesson
While CFS’s ‘Rethink Retirement’ report highlights a shortfall in retirement understanding and preparedness, there’s a potential upside for Australians. The fact that many of us overestimate the amount needed to retire means advice received will probably be good news. And good news is a pretty effective way of reducing stress levels.
The best advice to take away from this? Seek advice! But make sure it’s from a professional, a registered financial adviser.
Are you one of the Australians embarrassed to seek retirement advice? Does the ‘Rethink Retirement’ report change your attitude? Let us know via the comments section below.
Also read: Have we hit peak retirement?
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It’s the cost that puts me off. Quoted $3000
What you need falls as you get older. When we were in our early 70’s, $90,000 for a couple enabled us to do a couple of overseas cruises and flying business class to Europe. Business class becomes essential as you age for long flights to Europe. As you hit your 80’s (us now), long hauls to Europe become too much of a pain so holidays are nearer to home. However, Australian holidays actually cost more than overseas cruises. In you 80’s health costs go up as you can’t rely on Medicare for operations due to the long wait so Private health is essential. In your 80’s you drive less, our turbo diesel car is 12 yrs old and only done 80,000kms so another car probably won’t be required in the next 7yrs. Our expenditure has now dropped to ~ $75,000 even with inflation. With spare cash, now we are offloading money to help the kids and grandkids. We have never sought financial advice, everything is very logical. The only worry is aged care and dementia but we’ll probably fly to Switzerland to Exit before that time!