Nearly a quarter of Australians aged 30-65 say COVID-19 is forcing them to push back their retirement, new Colonial First State research showed.
For many working Australians, COVID-19 has been a reminder on the importance of retirement planning. Of the more than 1000 surveyed by Colonial First State in June, 45 per cent said they were “scared” or did not feel financially confident about retiring.
Those aged 35-49 were the most financially underprepared for retirement, while Australians aged 55-plus were more confident that they are on track with their retirement plans. Kelly Power, Colonial First State’s general manager of product, attributed this to the relatively lower level of savings younger people have.
“Younger Australians who still have time before retirement are feeling more anxious about retiring than their older counterparts because they’re still building up their savings pool while the reality of retirement costs start sinking in,” she said.
Women facing financial disadvantage, affecting retirement plans
The study also found that women are bearing the brunt of COVID-19 impacts on retirement plans, with a third of women indicating they do not feel confident about retiring, compared with a quarter of men. This is mainly due to the impacts of the pandemic, which has reduced how much Australians are able to save.
A third of women admitted that their superannuation was the only investment portfolio they held, which may mean they could retire with less wealth. This is compared with 17 per cent of men relying solely on superannuation for investments.
Ms Power said this could be a real financial disadvantage for women come retirement.
“It was an issue before the current crisis, and it will be an even bigger problem when we emerge from the recession,” she said.
Female workers aged below 35 held a superannuation pool of $53.5 billion in 2017-18, while male earners had $69.8 billion, according to the Australian Superannuation Funds of Australia.
Super fund HESTA found that the majority of those who accessed their super due to COVID-19 impacts were women, with many being lower-income earners.
COVID-19 a financial “wake up call” for working Aussies
Ms Power said the pandemic has created financially challenging circumstances for many people.
“It has been a big wake up call for those Australians in their prime working age regarding their employment, savings, expenses, investments and super, and many have been forced to get a better grasp of their finances,” she said.
About a third of Australians indicated that they are saving less than usual, due to a loss of income, as well as an increase in bills. Half of survey respondents intend to cut back on spending and manage their budget more closely.
More than four million workers pulled $30.3 billion out of their super due to the financial impacts of COVID-19 since late April, the latest Australian Prudential Regulation Authority (APRA) figures showed.
Some who are relying heavily on their retirement savings to get by have applied to access their super for a second time. About 1.1 million have asked to withdraw from their super twice, with these repeat applications totalling $9.4 billion.
And in the week to August 2 alone, nearly 140,000 applicants requested to access more than $1 billion in super funds.
“We know that there have been a lot of Australians needing to access their super early as a way of surviving income loss, but either way super has become a more important topic of discussion in Australian households,” Ms Power said.
If you’re concerned about how much you could be left with when you retire, it could be worth understanding how much you’ll need to live comfortably after retirement. The number is going to be different for everyone, depending on your financial circumstances, working status, lifestyle and age. Consider speaking to a financial planner for advice on retirement planning, or use a calculator to help you work this out.