Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Australians are retiring older than their peers as longevity risk looms
Retirement conditions are improving globally, but individuals are not necessarily feeling it, with nearly half of respondents to a Natixis Investment Managers (Natixis IM) investor survey saying it would take a miracle to retire securely. And while Australia retains its top-10 ranking on retirement security, Australians are retiring years later than their global peers.
Nearly all developed countries in Natixis IM’s Global Retirement Index showed year-over-year improvement in overall retirement security, the asset manager said, attributing the strong outcome to improved economic conditions as economies rebound from the COVID-19 pandemic. Strong employment growth and rising wages are also factors, while higher interest rates have improved the funding ratios of pension schemes.
“For the first time in a decade, the data presents reasons for renewed optimism about retirement security,” the report stated. “But while improvements in the areas of finances in retirement, material wellbeing, health and quality of life suggest that retirement security feels more attainable at the macro level, individuals in many countries are not as optimistic.”
Natixis IM noted that, even as the central banks have shown success in their bids to contain inflation, 42 per cent of working individuals who responded to its 2023 Global Individual Investor Survey said inflation is “killing” their dreams of retirement. Fifty-six per cent of respondents believe they’ll have the freedom to do what they want, when they want, but 21 per cent believe they’ll have to work beyond retirement age and 10 per cent believe they’ll have to sell their home.
The biggest challenges threatening retirement security include inflation, which represents the most pressing financial fear for 73 per cent of retired people and 60 per cent of working people, the survey showed. Investors globally also identified rising interest rates as a top concern, although Natixis IM noted that “only 2 per cent of the 8,550 individual investors surveyed correctly identified what a rising rate environment means for their investments”.
Australia retained its seventh-place spot in the global rankings for retirement security – its ninth consecutive year in the top 10 – coming in behind Norway, Switzerland, Iceland, Ireland, Luxembourg and the Netherlands.
It improved or remained steady across all four categories the index tracks: finances in retirement, health, quality of life and material wellbeing. On finances in retirement, Australia improved from fourth to third place; it jumped from 19th to 13th on material well-being.
Despite that high level of security, Natixis IM found that individual Australians are retiring later than their global peers, at age 65 versus the median retirement age of 61.
“Australia’s superannuation system is world class, and one of the reasons why Australia consistently ranks in the top 10 in the world for retirement security,” said Louise Watson (pictured, left), country head Australia and New Zealand at Natixis IM. “It is concerning that we are retiring later than other countries, though; this really shows how important it is for us to make our investments work as hard as possible while we are employed and well into retirement.”
Watson urged investors to look beyond Australian equities and property and seek to incorporate a range of investment strategies.
“This will bring greater diversity to their portfolios and give them the best chance of retiring when they want, and living the life they want, in retirement.”
Cost-of-living anxiety grows
In other new research, National Seniors Australia and Challenger found rising costs of living are increasingly worrying older Australians, with four in five saying it negatively impacted their lifestyle and well-being.
According to the National Seniors Social Survey of nearly 6,000 people aged 50 and over, 53 per cent of respondents are worried about outliving their savings. Respondents who expressed concern over long-term cost-of-living struggles were five times more likely to be worried about longevity risk, or the risk of running out of money in retirement.
“An important factor for retirement wellbeing is having the financial capacity to maintain living standards that were enjoyed before retirement,” said Aaron Minney (pictured), head of retirement income research at Challenger.
“In general, older people’s sense of financial resilience and financial security have fallen since the start of the pandemic, and the increasing cost of living has further undermined long-term planning and financial goal-setting of older Australians.”
