Expected retirement age jumps six years

A global study has found Australian investors over 45 years of age are growing more certain about their financial standing and when they can retire but the expected retirement age has risen. 

According to the 2022 MFS Global Defined Contribution Survey, which included over 1,000 people who contributed to an Australian superannuation fund, the expected age of retirement had been revised to 66 years. This was up from 60.7 years in 2021.

Over half of Australians under 45 years of age believed they would need to work longer than expected due to economic fallout from the COVID-19 pandemic. Nearly one in three (30%) didn’t think they’ll be able to retire, compared to respondents over 45 years old (21%).

Meanwhile, seeking advice from a financial adviser came out on top when it came to post-retirement plans among older Australians, followed by setting up an account-based pension with MySuper.

A quarter of respondents (25%) said they planned to commence a transition to retirement income stream with MySuper while still working and 22% expected to rely on the Age Pension, either partially or fully. 

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“Though planning a comfortable retirement with certainty remains difficult, it is encouraging to see confidence and conviction levels return after the destabilising effects of COVID,” said Marian Poirier, senior managing director and head of Australia and New Zealand at MFS Investment Management.

 “Investors appear much more receptive to receiving advice as they increasingly assert their investment preferences, and trusted superannuation funds are poised to build out advice models.”

As recorded in the survey, 52% of Australian investors pointed to their super fund as a source of advice. They were also becoming marginally more receptive to formal advice from an adviser, up 1% to now stand at 30%. 

More than half of Australian investors said they would use an adviser if one were provided by their super fund. They were also increasingly turning to financial publications (15%) and robo-advisors (11%) to receive advice, though in-person continued to be the preferred method. 

Environmental and sustainability concerns also remained a top priority. Globally, Australians led the global push to ESG investments in their retirement plans at 81%, compared to the United Kingdom (80%), New Zealand (78%), and Canada (72%)

The desire for ESG investments also cut across age brackets. Over 70% of Australian baby-boomers (between 55 and 73 years of age) said they wanted ESG investments in their super offerings, an increase of 6% from last year.