Paying off mortgage preferred over super

BRICKS and mortar is still the preferred retirement savings plan for many Australians, according to new research.

Paying off mortgage preferred over super

BRICKS and mortar is still the preferred retirement savings plan for many Australians, according to new research.

A survey, commissioned by the Australian Institute of Superannuation Trustees (AIST), found 35 per cent of respondents thought paying off the mortgage was a better investment than superannuation.

Almost a quarter believed investing money in property produced much better returns than a nest egg.

"The dominant financial goal for many . . . is centred on housing," says Nicole Torkar of research group IPSOS, which conducted the study.

"The majority that we surveyed were happy with how their funds were performing. However, compared to the actual value of their home . . . the amount in their fund is not perceived to be so super."

Using the equity in the family property or small business once they retired was also the back-up plan for 10 per cent of respondents.

"Ownership of a house is seen as a critical insurance necessary when reaching the end of your working life," Ms Torkar says.

"As a consequence some Australians see their house as a cashable asset to fund retirement if they really get stuck. However, others who have found themselves without enough money and who have toyed with the idea of actually downsizing find that the reality is quite different.

"When they go looking for a house of similar quality in the same area (they) realise that they don't actually want to leave their community and re-establish elsewhere."

The survey findings were drawn from 2000 Australians aged 18 to mid-70s. After housing, children ranked as the top financial priority.

"Parents admitted that they were prepared to do whatever it takes to get their children successfully into adulthood," Ms Torkar says.

"Their retirement savings were a second goal.

"Many said investing in their children is also investing in their future."

However, most Australians were confused about what exactly the future held.

More than two-thirds believed the Government would change the super rules by the time they retired, while 41 per cent were not sure if the age pension would still be around.

"Thirty per cent reported that they worried that their fund would go broke and that they would lose their entire retirement nest egg," Ms Torkar says. A further 30 per cent said they didn't know "very much" or knew "nothing at all" about their super.

AIST chief executive Fiona Reynolds says that this is both surprising and disturbing, given compulsory super has been in place in Australia for the past 15 years.

"Each fund member should be able to understand at least the general features of how the system works and the particular features of their own fund," she says. "There is a need to regulate for clear consumer documentation that is easy to understand while still connecting consumers."

Other key findings included:
* Only 6 per cent were "very confident" they will have enough to retire on.
* 20 per cent don't know how much super they had.
* 27 per cent couldn't imagine the day they would stop work.