Building your retirement confidence

What are the vital steps to take?

Most Australians aged over 50 don’t think that they will achieve a comfortable retirement. That’s the blunt top level finding from a survey of 2250 which was conducted by Colonial First State (CFS) superannuation and reported in the annual Rethinking Retirement report.

When the responses are split by gender, 47% of men feel this way – but an alarming 62% of women have lost faith in the goal of a comfortable retirement. This just isn’t how it is meant to be after 30 years of compulsory superannuation. Other insights from Colonial First State add to an even more negative picture of retirement sentiments.

Are you managing your expectations?

In the first edition of Rethinking Retirement (2024), when asked how much money was necessary for a comfortable retirement, the average amount was $1.6 million. That’s about eight times the median super balance held by singles and about 4 times that held by couples, combined. Most people will not achieve anywhere near the desired $1.6 million.

In a way these over expectations for savings underpin the first insight of a lack of faith achieving a comfortable retirement. If you believe that savings of $1.6 million are necessary to be comfortable and the facts show that you are more likely to have only a fraction of this amount, of course you’ll be disheartened. Who wouldn’t be?

Something doesn’t quite compute here. 

Could it be that the expectations of too many pre-retirees are simply unrealistic?

Or is it because too many pre-retirees lack awareness or knowledge about the possibility of leading a happy and productive life in retirement despite having nowhere near the suggested ideal of $1.6 million. They just don’t know how their sums will add up. And it’s far from misleading to say that a happy retirement is possible on much lower savings. That is the situation for the majority of today’s retirees, who survive happily on a mix of Age pension entitlements and modest super balances or private savings.

Where the Rethinking Retirement report becomes even more interesting is on the subject of ‘preparedness’ for retirement. Again, there were notable differences between the genders in agreement with the statements:

• I am on track to achieve my retirement goals
• I feel financially prepared for retirement

Here are the results:

On track – males 68%, females 55%

Financially prepared – males 53%, females 34%

A similar disparity arose when comparing responses to these same questions between those who have received financial advice and those who have yet to do so:

On track – Have received advice 85%, No advice 49%

Financially prepared – Have received advice 70%, No advice 30%

A short summary on the specific ways that advised individuals are better off when it comes to ‘retirement readiness’ tells us:

• Over twice as likely to feel financially prepared for retirement.
• Significantly more likely to say they are on track to achieve their retirement goals.
• Those with advice are twice as likely to know how their super is invested compared to Australians who have never been advised.
• They are also almost twice as likely to retire at a time of their choosing compared to Australians who have never been advised.

There’s financial advice…

 and then there’s affordable financial advice

Over the years the advisers at Retirement Essentials have helped thousands of Australians to better understand:

• their individual situation, 
• their likely retirement income over the years and 
• the options they have to maximise this amount. 

The critical difference with the Retirement Essentials offering is that it is manageable in terms of time, specificity and price. Many retirees cannot afford comprehensive advice (typically $4000-$5500) for a detailed ‘whole of life’ plan when they urgently need answers to one aspect of their retirement. This might be managing a mortgage, receiving an inheritance, starting an Account-Based Pension (ABP) or understanding how their super can top up Age Pension entitlements. 

Here are two brief examples of the way that a timely Retirement Advice Consultation solved challenges for Lesh and Arthur. Both these appointments were booked with Nicole Bell.

Adviser, Nicole Bell:

An extra $180 per fortnight is not to be sneezed at

Lesh emailed me to thank me for our time and let me know that, because she and her partner had spoken to me, they were able to get in touch with Centrelink and have the additional land around their home declared exempt (as they have been there for more than 20 years). They are now getting $180 per fortnight more in Age Pension payments because of this discussion. Overall Lesh says that they have a much better understanding of their asset position and exactly how Centrelink views their circumstances.

Making sure nothing is missed:

I also spoke to Arthur that same week. He previously paid $8,000 for financial advice and became angry and frustrated because he felt that the adviser was just trying to sell company products and not looking into their best interests. He considers himself quite financially literate but he just wants to be able to speak to someone who can run through the rules, so that he can feel reassured that he has interpreted information correctly – and there are no critical rules he’s missing. Our discussion made him much more confident in making his financial decisions for retirement, and he plans to come back regularly and check in to see where they’re up to. This is so common, people wanting to pick our brains to make sure they’ve not missed anything. Immediate financial value may not be obvious but they just feel so much more empowered in making their own decisions.

The first appointment was a Retirement Advice Consultation, designed to maximise entitlements, with the great result of nearly $5000 extra in one year. Not only has Lesh gained vital confidence in her and her partner’s financial situation and entitlements, but she has also gained the confidence to now spend on some long-delayed renovations.

Arthur booked a general Retirement Advice Consultation because he wanted advice he could trust without any conflict of interests or product push. He, too, felt more confident after his appointment with Nicole, mainly because he had a second opinion from a qualified adviser who knows all the relevant rules and can ensure he’s not overlooking anything,

In response to demand …

Retirement Essentials has now introduced a new consultation which has been designed to help people who are new to advice and unsure how to start preparing for retirement that includes a level of income that matches their needs. This is the Retirement Health Check, a 45-minute guided online consultation which allows you to:

• Share your goals – confirm your wish list, how much you’ll need and if your savings will last
• Understand your options – learn ways to boost super, maximise Centrelink entitlements, and secure your retirement income.
• Plan for your future – discover the key steps you could take to help you feel confident and in control.

The uptake for these specific consultations has been really heartening. Said Neville after his Retirement Health check with adviser Andrew Dunkerley:

“Andrew was up to speed with my situation very quickly and answered all my questions. I was not rushed off the call until he was sure he had covered everything. This service is very price effective and I get a lot out of the newsletters.”

What’s your opinion?

Are you feeling confident about your ability to lead a comfortable retirement?
Would you describe yourself as financially prepared?