Shortfall of $200k expected in retirement savings

There is a $200,000 shortfall between what workers expect to need in retirement and what they believe they will have, according to AMP.

AMP research of 2,000 people found workers believed they would need close to $600,000 in retirement but only expected to retire with $400,000.

However, this fear had prompted the number of people thinking about retirement plans to double from two years ago and 60% of people said they now had a specific retirement goal.

The number of people who were worried they lacked enough to retire had risen from two in five people in 2020 to three in five people this year while there had been a 10% increase in the number who believed they would need to work longer.

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More than three in five Australians said they would work for longer to avoid a lifestyle downgrade once they finish work, with only one in three happy to re-adjust their lifestyle expectations.

This had worsened by market movements with almost half of women and half of the general population aged 50-59 concerned about higher costs, rising inflation and volatile investment markets affecting their retirement lifestyle.

Ben Hillier, AMP general manager for retirement solutions, said: “Heightened by increasing cost of living pressures, this fear of running out stems from a basic lack of understanding – an awareness gap – of their finances and the retirement system. Many pre-retirees also feel like they’ve left their retirement planning too late.

“The key takeaway from this research is for all Australians is to engage more with their retirement planning, and access resources and help – it’s never too early, or too late.”