Australia lags US, UK and Canada on retirement confidence

Australian superannuates have the least certainty about what returns to expect on their retirement savings and at what rate to withdraw as compared to those in the United States, Canada and the United Kingdom.

According to the latest MFS Global Defined Contribution Participant Survey, which surveyed over 4,000 people globally, including more than 1,000 who contribute to an Australian superannuation fund, about a third of Australians were not confident about retiring at a desired age or seeing their savings last throughout their lifetime.

This contrasted sharply with retirement confidence in the US, the highest of any market, where less than one-in-five savers were not confident they would realise their desired retirement age and income adequacy throughout retirement.

Almost one-third (32%) of Australians relied on their super fund to help them make retirement contribution and planning decisions, while 30% turned to a family member and only 29% received professional advice.

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Just over half of advised people elected their planner based on fees, followed by years of experience and retirement planning expertise.

Applying a gender lens, 34% of men surveyed turned to a financial adviser for retirement advice, compared to 24% of women.

Marian Poirier, senior managing director, head of Australia and New Zealand at MFS Investment Management, said: “Sources, quality and consistency of advice vary widely.

“We see enormous potential for advisers to provide a greater and more specialist role in providing asset allocation advice to superannuants, especially women who remain under advice despite their working lives typically being more varied and punctuated by life events.”

Australian investors were in step with global peers in believing they needed to save more and work longer than planned due to COVID-19, particularly those under 45 years old.

About two-thirds of the younger cohort in Australia believed they would need to save more for retirement, while 58% believed they would need to work longer to achieve their retirement savings goals.

Poirier said: “Retirement age and income adequacy remain ongoing and highly complex discussions for Australia’s wealth industry, perhaps more so given the retirement investing psyche clearly appears quite sensitive and risk averse at present relative to other markets.

“The shock and persisting uncertainty caused by the pandemic has undoubtedly left an indelible mark on younger retirement investors, and their concerns need to be properly addressed for them to get back on track, with a deeper appreciation that uncertainty and opportunity are often key to long-term investing.”