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Home ownership and age pension fail to ‘guarantee’ financial security
A new research report has revealed that 90 per cent of retirees still feel financially insecure even when they own their own home and receive the age pension, saying that it’s insufficient to meet their basic living needs in retirement.
Half of those surveyed said they would need $10,000 (singles) and $15,000 (couples) a year more than the age pension to meet basic needs – the pension was simply inadequate.
The research also highlighted the lack of appropriate information to help navigate retirement. Of those who hadn’t received adequate advice, 42 per cent said they wanted to know more about aged care cost calculations, followed by investment options (34 per cent) and options to balance spending and saving (22 per cent).
By contrast, respondents who had received adequate financial advice were more likely to be financially comfortable, retired and own their home outright.
The main barriers to seeking financial advice were cost (32 per cent), lack of trust in advisers (29 per cent) and finding an adviser to meet specific needs. As the report says, “older people require a spectrum of financial advice, services and products. These need to be appropriate and tailored to individual life circumstances and perspectives, including on financial comfort and priorities.”
The research report, titled The National Seniors Social Survey, was authored by National Seniors Australia and retirement income provider Challenger, with 4,700 Australians aged 50 and over interviewed. Those aged between 50-66 comprised 16.6 per cent of respondents, between 67-76, 59.3 per cent and over 77, 24.2 per cent.
National Seniors Australia chief executive officer Chris Grice (pictured) says the report illustrates the growing concern among seniors that they don’t have the appropriate support to plan for retirement.
“We found that calculating aged care costs was the topic most people wanted financial advice about. Older Australians feel anxious about the prospect of needing aged care and the unknown costs associated with it. We must ensure seniors are not left to navigate these challenges alone, without adequate guidance or resources.”
Challenger head of retirement income Aaron Minney concurs. “Australians need help to best use their savings to live life to the fullest, at every stage in retirement. We’re living longer and it’s essential for retirees to plan for 30 years or more in retirement.
“With the right guidance, we can ensure that people are financially prepared for aged care when they need it, and can enjoy an active retirement, knowing they are ready.”
The report highlights that increasing living costs and inflation have created a divide among older Australians. Only half of those with less than $350,000 in savings feel financially comfortable compared with 84 per cent of those with more than $350,000, highlighting a significant gap of 34 per cent.
When respondents were asked how they would spend an extra $100 a week, one-third said they would save the extra money for later spending – such as a holiday or other big-ticket items – while another 29 per cent stated they needed the funds for their everyday essentials.
Specifically, housing costs, including rent and mortgage payments, were a major concern for those feeling less financially secure. Grice adds: “This research clearly shows that many older Australians are struggling to reconcile the cost of living with their retirement income. It’s not just about making ends meet; it’s about ensuring that retirees have the financial security to live with dignity and peace of mind.”
The report finds paying for aged care has become a dominant concern for older Australians in 2024 with 60 per cent of respondents worried about how they cover these expenses. In 2021, the research found that only 38 per cent of people had considered aged care costs.
Nearly half of those surveyed (46 per cent) were interested in a lifetime income option for at least some of their retirement income. This compares with less than one in 10 Australians who have a guaranteed income stream, either directly through an annuity or as part of their (defined benefit) superannuation.
One in five said they didn’t have enough savings to consider guaranteed income as an option. Minney says: “Lack of awareness and understanding about retirement income options has been a real challenge for Australians in or approaching retirement.”
