Over 80 per cent of working Aussies might not have enough to retire

A staggering 81.3 per cent of Gen X & Y Australians are at risk of falling short of a comfortable retirement according to research commissioned by No More Practice Education from Griffith University.

The research report, “Reinvention is the new Retirement”, found that in 26 years’ time, a balance of over $2.09 million[1] will be needed to achieve a comfortable retirement.

That figure means that as many as 81.3 per cent[2] of Gen X & Y won’t make it.

If Australia’s long-running inflation rate of 5.07 per cent is used the figure becomes even more arresting, with $3.98 million needed and 93.8 per cent of Gen X & Y falling short.

“These are big numbers and a wakeup call that we need to get real about what it’s going to take for us to reinvent our retirement trajectory. It’s clear that we must take real ownership for our financial futures and do it now,” said Marcus Field, managing director, No More Practice Education.

The research was headed up by Professor Mark Brimble of Griffith Business School and a team of four PhD qualified researchers utilising HILDA data to model real world likely outcomes.

“Whilst these numbers represent our ‘worst case’ scenario analysed, they are a very real possibility we need to be prepared for – this low growth scenario has been the reality for countries like Japan for over 20 years,” said Prof. Brimble.

The research also examined the coming intergenerational wealth transfer, finding that $3.5 trillion is likely to be transferred over the next 20 years from Australians over 60 to younger generations.

Analysis of the distribution of this wealth indicates that 75 per cent of Gen X & Y with surviving parents will inherit over $110,000, an amount that is potentially materially significant in changing our current trajectory.

“$110,000 invested well for 25 years could grow to be over $1 million, but it is also the sort of amount that could very easily be frittered on lifestyle. Getting people educated on how to invest that money for the long term is vital to all of our futures,” said Prof. Brimble.

It is also clear from the research what’s at stake at a national level – if that $3.5 trillion pool is invested in its entirety, the total positive impact to the Australian economy would be up to $11.9 trillion[3].

“Education and advice are going to be paramount in helping Australians navigate the coming challenges. That’s why we’ve brought together some of the world’s best investors as a Collective for our upcoming Investment Series TV show, Learn from the Money Masters, to help solve that education challenge,” said Field.

Featuring some of the biggest names in finance as well as one of Australia’s top CFP advisers, the show will follow Aussie celeb Blair McDonough as he learns from the Money Masters how and why he needs to reinvent his sources of income.

Premiering 12:30pm this Saturday on Channel 9, the show is aimed to educate ordinary Australians about the financial services industry and the value of advice.

Access the full report here

 

About No More Practice Education:

No More Practice Education provides online learning resources which are utilised by a community of 23,000 finance professionals and 14,000 consumers.

The group also provides educational content to more than 80 per cent of Australia’s financial advisers, which is produced through No More Practice’s sister company, and exclusive provider of content, evolution media group.

All consumer-facing content to the site is supplied by The Investment Series, which is No More Practice’s consumer education centre.

About evolution media group:

Founded by Vanessa Stoykov in 1999, evolution media group is a privately-owned business focused on inspiring wealth education.

The organisation has an unwavering commitment to offer wealth education opportunities to all Australians by telling entertaining stories with high production values across television, online, mobile and social platforms.

With access to some of the world’s biggest and most trusted names and an enviable list of joint venture partners, evolution media group provides an opportunity for growth by showcasing the principles of leadership, business and finance to create tangible education outcomes.

 

[1] Projecting ASFA’s current retirement standards figures at an inflation rate of 2.5%,

[2] Projections based on 3% capital growth rate, 0% wage growth, 0% savings outside super and 20% super contributions tax over 26 years.

[3] At 5 per cent rate of return

- End -


For further information, please contact:

Elizabeth Somerville, content & community manager, No More Practice Education on (02) 8968 6077 / esomerville@nomorepractice.com.au


Related News /

OneVue MD questions industry’s objectives

10 May 2017

This week on After Hours, Connie McKeage, managing director of OneVue shares her thoughts on the aims of the financial services industry and why sh....

Read now

Annick Donat on the importance of supporting small business

03 May 2017

This week on After Hours, Annick Donat, chief executive of Madison Financial Group shares her thoughts on why small businesses form the ba....

Read now

Amanda Gillespie of the weight of responsibility

26 April 2017

In the next episode of After Hours, the industry’s only late-night talk show, Amanda Gillespie of Lonsec Fiscal Holdings discusses the central ro....

Read now

Jenny Josling on the importance of recognising true value

19 April 2017

This week on After Hours, Jenny Josling, managing director, Orbis Investments (Australia), challenges the sector’s fixation on fees and ....

Read now