TAL has published findings from its survey, “What I Wish I Knew About Retirement,” which explores the expectations and experiences of Australians nearing and living in retirement.
The survey, which included 1,000 Australians aged 55 and older, highlighted the critical role of superannuation funds in providing education and tools for retirement.
TAL’s study found that 51% of pre-retirees and 39% of retirees look to their superannuation funds for guidance on retirement decisions.
Ashton Jones, general manager of growth, retirement & wealth partnerships at TAL, said understanding the concerns and expectations of both pre-retirees and retirees allows superannuation funds to better assist their members.
“Our research shows that while three-quarters of pre-retirees are engaged or highly engaged with their finances, one in three don’t know what they will do with their super when they retire. Super funds can play a pivotal role in helping these members attain the retirement lifestyle they want and deserve,” he said.
The study identified several ways superannuation funds can further support members nearing retirement. These include offering financial tools and education, guidance on the Age Pension and aged care options, help with drawdown rates, and lifetime income products.
The research underscored the importance of financial preparation for retirement confidence.
It revealed that 34% of pre-retirees feel unprepared for retirement, with 32% yet to take steps towards financial readiness. Additionally, 38% are concerned about having insufficient funds to cover basic costs or maintain a comfortable lifestyle.
Jones noted the information gap among pre-retirees regarding superannuation needs and retirement outcomes.
“Pre-retirees want more information about how much super they need to retire, how much their super balance is likely to provide for them, and how they can improve their retirement outcomes,” he said.
The survey found that 39% of retirees had taken no action to financially prepare for retirement. However, those who had increased their investments, especially their superannuation, felt more confident about their financial situation.
At retirement, 34% of retirees had converted their superannuation to a regular income stream or pension account, 27% had kept their savings in an accumulation account, 15% had withdrawn most or all as a lump sum, and 7% had moved a portion to a lifetime income product.
Retirees who took their savings as a lump sum reported lower satisfaction, with only 56% content with their decision, compared to 87% of those who converted their superannuation to a pension account or lifetime income stream.
“Understanding why retirees had made financial choices, and what they’d do differently in hindsight, indicates that pre-retirees could benefit from specific guidance when making these important decisions,” Jones said.
The research also highlighted that many Australians retire earlier and live longer than expected. While most plan to retire between ages 65 and 69, 59% retire before this age.
Additionally, 53% of pre-retirees intend to retire gradually, but only 30% of retirees had done so, with 52% retiring immediately upon stopping full-time work. Unplanned retirements were often due to redundancy, illness, or unemployment.
Jones pointed out that unexpected early retirement can hinder financial preparedness.
“When retirement arrives sooner than expected, it can derail a person’s ability to prepare as much
as they’d like to. Some common themes that emerged for retirees were that many wish they’d put
more into superannuation when they had the chance, or that they’d started salary sacrificing earlier,” he said.
Additionally, one-third of retirees now expect to live longer than initially anticipated, with financial confidence highest in early retirement. Older respondents reported lower financial health, leading to financial stress among 32% of retirees over age 80. This underscores the benefits of retirement products that provide a lifetime income.
Declining physical health and cognitive decline were top concerns for retirees, particularly their future ability to make financial decisions.
While most retirees currently feel capable of making decisions about their retirement, confidence dropped significantly when considering their decision-making ability 20 years from now.
Jones emphasised the importance of early financial planning for retirees.
“With 2.5 million Australians approaching retirement in the next decade, it is essential that we do everything to ensure they are well equipped for the realities of life after work,” he said. “By offering members retirement income solutions that provide the certainty of an income for life, regardless of how long they live, superannuation funds can help more members move confidently through the different stages of their retirement.”
In March, TAL teamed up with superannuation fund AustralianSuper to launch a retirement income product. The offering aims to address the financial needs and preferences of TAL’s diverse members.
