Advice gap hitting those near retirement

One-third of Australians approaching retirement have not received advice and the sources they used don’t live up to expectations, while the process of retirement has become more complicated, according to a report.

According to the ‘The Future of Global Retirement’ report by retirement technology provider Smart, a quarter of those over 55 said they did not have a good understanding of the options available to them.

“Despite high numbers saying they have little understanding, more than one-third (34%) of respondents approaching retirement, and four-in-10 (38%) of the 45 to 55 age group, say they have never received any advice on retirement,” the report said.

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Seeking advice often did not live up to expectations as 29% of respondents aged over 55 said they had received useful advice from financial advisers and 16% said they had from their super fund.

The report also found that people expected to ease into retirement over a multi-year period and in Australia, 55% expected it to be an event done with several stages and only 16% expected it to be a one-off event.

About one-third of respondents of all age groups expected to continue to work part-time during retirement.

There was also the issue over converting a savings balance into income during retirement as most Australians wanted to keep their savings invested and use it to fund an income – either in the form of interest from investments or as a regular income stream.

“22% want to receive a guaranteed income or annuity; only 8% of respondents responded that they want to withdraw their retirement savings as a lump sum,” the report said.

“New regulation will require the superannuation funds to have a retirement income strategy for their members.

“The superannuation funds are well-placed to be the first source of advice and information for planning the retirement phase.

“By transforming member engagement, providing members with the tools they need to easily plan and implement their spending in retirement, they could make a significant contribution to improving retirement outcomes for Australians.”

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