Super regulatory change spooking pre-retirees

Pre-retirees are twice as worried about regulatory changes around superannuation in 2021 than the year prior, according to Investment Trends.

The research house’s latest retirement income report found 41% of pre-retirees were worried about the changes compared to 19% in 2020.

Kurt Mayell, Investment Trends associate research director, said: “The prospect of regulatory changes impacting peace of mind for many Australians either heading towards or in retirement”.

Illness was still top of mind in terms of retirement concerns at 56% of respondents.

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However, the report also found there was an increase in the number to 16% (from 10%) of pre-retirees that felt “very well prepared” for retirement, and 45% (up from 36%) felt “somewhat prepared. The proportion of pre-retirees concerned about having enough money for extras while in retirement had returned to pre-pandemic levels.

“For the first time in five years, one-in-two retirees expects their retirement savings will outlast their years in retirement,” Mayell said.

“As of September 2021, pre-retirees expect their savings to last on average 22 years, seven years longer than only a year ago.

“With an improved retirement outlook more Australians say they would eventually like to leave the balance of their super to their heirs, welcoming increased estate planning advice and content.” 

Pre-retirees also believed they would need on average $4,500 per month for a comfortable retirement while they expected to receive $4,100. This gap between anticipated and ideal retirement significantly narrowed, Investment Trends said, and demonstrated retirees were feeling more comfortable with their levels of retirement savings.

However, many were largely unaware of the retirement income products offered by their main super fund or were unconvinced those on offer were fit-for-purpose.

“There are enormous opportunities for super funds to provide clarity about the pension products and strategies they offer, suggesting the developing Retirement Income Covenant seems to be taking shape at just the right time,” Mayell said.

Investment Trends also found 50% (up from 31%) of Australians over age 40 enquired about estate planning over the past 12 months, and those that did not have an estate plan welcomed information about super death benefits and tax implications (54%) and wealth preservation (52%).

The family home was found to be the main asset people intended to pass on as inheritance (80% cite), followed by non-super investments (62%) and super (53%).