New survey results from Roy Morgan Research shows that the average age of Australians intending to retire in the next 12 months is 61 years, up from 58 years in 2014. The average in 2008 was 57.5 years. Average age of “intending” retirees creeping up. “This increase is likely to be a reaction to extensive negative publicity given in the lead-up to changes to pension eligibility and superannuation rules,” the research house says, “combined with low deposit rates and economic uncertainty.”
Roy Morgan says that increasing retirement age is generally held to be a positive for the government, and for superannuation funds, as it means a reduction in the period the government has to fund retirees from the age pension, and it allows super funds a longer accumulation phase.
Roy Morgan also surveyed the level of retirement savings held by those intending to retire (with results based on a sample of 50,000 Australians). The researcher found that the current average gross wealth (excluding owner-occupied homes) of intending retirees is $286,000. This is up from $276,000 (a mere 3.6%) since 2014.
The very modest level of average retirement savings can be partially tempered by other data that Roy Morgan was able to extract. The research house also looked at the type of super fund held by intending retirees (over the 12 months to October 2016) and discovered that the sample surveyed mostly held their retirement savings in industry funds (41.1% of pre-retirees), retail funds (33.4%), public sector funds (21.8%) and that only 8.5% had a self-managed superannuation fund (SMSF).
Norman Morris, Industry Communications Director at Roy Morgan Research, says: “The average level of savings and superannuation for those intending to retire in the next 12 months is well below the new age pension asset eligibility levels announced recently by the Australian Government, and so pressure on government funding will continue for some time yet.”
The average level of debt for this group is only $18,000, so debt repayments appear not to be a major concern for most. Roy Morgan found that a clear majority (85%) of intending retirees either own or are paying off their home, with an average value per person of $495,000 or 73% higher than the average ($286,000) in all other retirement funds.
“Intending retirees who own or are paying off their home have a major potential source of retirement funding compared with those who rent,” Morris says. “But there is partial recognition of this problem as non-homeowners have higher asset limits than homeowners when it comes to the assets test for pension eligibility.”
The overall conclusion the survey reaches from this is that on average intending retirees will be relying on some government benefits for a considerable time yet, even with the changes to the eligibility rules.