Cash-strapped retirees returning back to work
Alarming new findings have revealed many Aussies simply don’t have enough money once they stop work, as debate rages on whether the compulsory super guarantee rate should rise.
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Exclusive: Many retirees are cash-strapped and are having to return to work to make ends meet, alarming new findings have shown.
While debate continues over whether the compulsory super guarantee rate should rise to 12 per cent by 2025, a new report from Industry Super Australia showed many Australians don’t have enough money once they stop work.
It comes after many super balances took a massive tumble following a disastrous week on the Australian sharemarket.
The report, Australians’ experiences and expectations of retirement, surveyed 700 industry fund members aged 47 and over and found 38 per cent of recent retirees were living on a very tight budget to afford essentials.
About one in four retirees still work occasionally and of those 60 per cent said the main reason they had to return to some sort of paid work was to help bolster their finances including to help pay the bills or try and have a more comfortable lifestyle.
Industry Super Australia’s chief executive officer Bernie Dean said the research showed many people who had recently retired “were living off a really tight budget with only enough for the essentials of life”.
“It’s leading to more and more retirees having to go back to work occasionally, some are going back to do a lot more and some are going back to do a little bit,” he said.
“It’s a real marker about how people are striving for a dignified retirement but when they get there they find they need to have saved more.”
Latest figures from the Association of Superannuation Funds of Australia showed to achieve a comfortable lifestyle Australians now need $62,269 a year and singles need $44,146.
This is on the premise they own their home outright and have good health.
Overall at retirement couples require $640,000 and $545,000 for singles to live comfortably.
AustralianSuper’s national manager of financial advice Frank Ceravolo said all major life events impacted people’s finances therefore reviewing your super was critical.
“People should regularly look out for fund performance, fees and how their retirement money is tracking,” he said.
“Super should be considered as part of your bigger financial picture and checked regularly to ensure your retirement savings are on track.”
The report also showed the gender pay gap still exists – pre-retiree males had about $340,000 in super compared to just $190,000 for women.
Tribeca Financial’s chief executive officer Ryan Watson said the earlier people started contributing extra to super the better.
“A good rule of thumb to provide for a comfortable retirement is to contribute 15 per cent of your pre-tax salary into superannuation over your working life,” he said.
Recent submissions to the Federal Government’s Retirement Income Review closed in February and a report is due to be handed down in June.
Some of the recommendations included fast-tracking the rise of compulsory super to 15 per cent by 2025 instead of 12 per cent in the same time frame.
Compulsory super is set to rise for the first time in six years in 2021 from 9.5 per cent to 10 per cent.