More Australians planning retirement, but need more wealth

A growing number of Australians are planning to retire over the next 12 months, though most won’t have the superannuation and savings necessary for a self-funded retirement without selling the family home.

According to Roy Morgan, 426,000 people (220,000 men and 206,000 women) intend to retire over the next year – 30% more than the 328,000 recorded in 2008. Factors that could delay retirement decisions include uncertainty around the share market and house prices impacting household wealth.

These intending retirees are financially better off compared to those from a decade ago, with an average gross wealth, excluding owner-occupied homes, of $331k, up 40% from $237k in 2008.

However, a larger percentage of this retirement wealth is made up of superannuation – 69% compared to 53% in 2008. Today’s intending retirees also have debts that are 73% higher than those from a decade ago.

These debts reduce their overall net wealth to $305k – still 37% higher than in 2008, but considered generally inadequate for self-funded retirement, with Roy Morgan citing estimates from the Association of Superannuation Funds of Australia (ASFA) where an individual would need $545k and a couple $640k for a ‘comfortable lifestyle’.

One asset that could potentially turn a retiree relying on government benefits into a self-funded retiree is the owner-occupied family home, according to Roy Morgan. According to the survey, 76% of intending retirees currently own or are paying off a home with an average value of $850k – nearly four times the average held in superannuation, and up 58.3% from the average value of $537k seen in 2008. However, 81% of intending retirees in 2008 were home owners, meaning there are more retiree renters in 2018.

Roy Morgan industry communications director, Norman Morris, said that the lack of easy access to savings and super for a self-funded retirement may put more pressure on the Australian government to provide retirement funding:

“Additional pressures currently on retirement decisions are the declining real estate and stock market values which have the potential to delay retirement and encourage people to keep their jobs longer.”

“Intending retirees who own or are paying off their home have a major potential source of retirement funding, and with its tax exempt status, they have a considerable advantage over renters, even if values decline. To include the value of homes in retirement funding decisions is likely to take a major mind shift for many as the home is generally regarded as being sacrosanct and as such not to be involved in retirement funding.”

Compare super funds