Retirement

Markets may have outperformed in 2023 after a dour 2022, but it wasn’t enough to lift confidence in retirement as cost of living pressures continued to cloud the financial future of many Australians.

Diligence and frugality can lead to wonderful retirement outcomes, writes Alteris Financial Group senior adviser Jaxon King. But if the journey to retirement is bleak, it could sap the joy out of reaching the destination.

Higher mandatory contributions and increased pension assets helped Australia improve on its 2022 score in Mercer annual index, and move up a spot in the 47-country ranking. Yet the research cited room for improvement.

Australians are retiring much later and with more in their retirement coffers than ever before, according to the ABS, with a confluence of factors behind the trend.

While the need for retirement income solutions is great enough to be mandated in some corners, the local annuity market remains a tough nut to crack. So Generation Life has reached out to advisers and a host of others for input into its product offerings.

The Financial Services Council commissioned the Retirement Income Policy Roadmap to help the superannuation system put greater emphasis on the drawdown phase. Industry leaders say the biggest hurdle is a deeply entrenched fear of running out of money.

Working Australians aren’t getting real when it comes to plausible retirement ages and income levels, according to data from Vanguard, with a new report suggesting expectations get closer to reality as retirement draws near.

Sentiment around retirement prospects is declining across the board in Australia, with millionaires almost as likely as less affluent investors to believe it would take a miracle to retire securely. Recent reports highlight the correlation between the new economic uncertainty and reduced confidence in a comfortable retirement.

Australians should be putting more money into superannuation and diversifying out of property, some say, even as super performance remains a question mark.

Higher rates and the cost of living, on top of global events, have contributed to increased Fear Of Running Out across the country. Yet the level of concern may be relatively unfounded, AMP reports.

By holding ground in areas such as quality of life, material well-being, finances and health while other countries fell back, Australia moved up two spots to 5th on the latest Natixis Global Retirement Index.

As share markets fall, superannuation research houses are predicting a negative financial year for both balanced and growth superannuation funds.