This discrepancy was a key finding in a study by Colonial First State (CFS) detailed in 'The CFS Rethinking Retirement Report 2024'. Some participants even reported they would need upwards of $2 million to retire comfortably, particularly those without previous financial counseling.
"The contrast between people's assumptions and the guidelines suggest an information gap," stated Kelly Power, CFS Superannuation chief executive. She observed that without proper guidance, there's substantial confusion regarding the required retirement funds. Power also noted the public's desire to bequeath a significant portion of their superannuation to succeeding generations, contending the predetermined purpose of these savings.
Power pointed out a common trend among retirees to hold onto a part of their assets in their sunset years. This notion may be driven by their aspirations to support intergenerational wealth transfer and address the rising cost of living worries, as well as uncertainty over one's lifespan. "People are entitled to use their savings as they see fit, although this does conflict with current tax incentives aimed at encouraging people to utilize their super more rapidly," Power explained.
The survey unraveled widespread retirement concerns among Australians, highlighting a mood of reluctancy or embarrassment to seek assistance. The most dreaded inquiry was quantifying the requisite sum for a retirement nest egg. Strikingly, 83% of Australians prefer liquidity and access to their super if contingencies arise, in contrast to committing to conventional retirement.
A comfortable retirement's subjective nature yielded diverse conceptions; however, the majority of retirees claimed satisfaction with their current level of savings. The options favored by those planning to extend their work life consisted of reduced hours, maintaining existing hours, or shifting to a passion project or a less intense role.
The impact of financial advice was also underscored by the study; retirees who have sought professional advice generally expressed a more fulfilled retirement experience. They enjoyed more freedom in choosing their retirement timing, with double the likelihood compared to those without prior consultation. However, the reliance on super funds for retirement planning advice remains limited, with only a minority proactively seeking insights from their fund.
In light of the varied requirements of members regarding retirement and advice, Power argued that personalized strategies are crucial and underscored the deficiency in one-size-fits-all solutions. She advocated for “hybrid conversations” and personalized financial advice to navigate the intricate landscape of retirement planning effectively.
