Retirees Want Guidance Around Retirement Decisions


New research from TAL highlights the role of superannuation funds in providing retirement education and tools to members, with 51% of pre-retirees and 39% of retirees looking to their fund for guidance around their retirement decisions.

TAL surveyed 1,000 Australians 55 and older and its research, What I Wish I Knew About Retirement, reveals the expectations of Australians approaching retirement versus the lived experience of retirees.

Ashton Jones, TAL General Manager of Growth, Retirement & Wealth Partnerships, says by understanding the expectations and concerns of pre-retirees and the realities of those living in retirement, superannuation funds had an opportunity to help more Australians enjoy a fulfilling retirement.

Ashton Jones …there is work to be done to ensure Australians nearing retirement feel financially ready

“Our research shows that while three-quarters of pre-retirees are engaged or highly engaged with their finances, one in three don’t know what they will do with their super when they retire. Super funds can play a pivotal role in helping these members attain the retirement lifestyle they want,” he says.

The research highlights areas where superannuation funds could further support members approaching retirement including:

  • Providing financial tools and education to help with retirement decisions
  • Guidance navigating the Age Pension and aged care options
  • Assistance optimising drawdown rates
  • Providing lifetime income products that give members the confidence to spend their retirement savings
  • Guided pathways to help members choose financial products that are right for them

The research shows there is work to be done to ensure Australians nearing retirement feel financially ready with:

  • 34% feeling unprepared
  • 32% of pre-retirees have yet to take steps to prepare for life after work
  • 38% are concerned they will not have sufficient funds to either cover basic costs or maintain a comfortable retirement lifestyle

“Pre-retirees want more information about how much super they need to retire, how much their super balance is likely to provide for them, and how they can improve their retirement outcomes,” says Jones.

While 39% of retirees had taken no action to financially prepare for retirement, those who topped up their investments, particularly their superannuation, felt the most confident about their finances.

At the point of retirement:

  • 34% of retirees had converted their superannuation to a regular income stream or pension account
  • 27% had kept most of their savings in their accumulation account
  • 15% had withdrawn all or most of it as a lump sum
  • 7% had moved a portion to a lifetime income product

…retirees who had taken their savings as a lump sum were least satisfied with their choice…

TAL says that in retrospect, retirees who had taken their savings as a lump sum were least satisfied with their choice, with only 56% saying they were now happy or very happy with their decision, compared to 87% of those who had either moved their superannuation to a pension account or lifetime income stream.

It notes that Australians commonly expect to retire between the ages of 65 and 69 but many stop working earlier, with six in 10 retiring before this age (59%).

“Further, while most pre-retirees intend to retire gradually (53%), this was the case for only 30% of retirees, with over half (52%) retiring immediately upon ceasing full-time work. For retirees whose retirement date was unplanned, the main reasons for leaving the workforce were redundancy, sickness and unemployment.”

Living Longer

A third of retirees now expect to live longer than they anticipated when they first retired. The insurer says this is reflected in the finding that retirees felt most confident about their finances in early retirement, with older respondents reporting lower levels of financial health.

“This led to financial stress among 32% of retirees over age 80 as they draw down their retirement savings, highlighting the benefits of retirement products that pay an income for life.”

The research also found that declining physical health and reduced mobility are the key concerns for retirees. Many also worry about their mental health and cognitive decline over time.

… they’re worried about their ability to make financial decisions in the future…

“In particular, they’re worried about their ability to make financial decisions in the future. Most retirees feel capable of making decisions about their retirement right now, with only 10% reporting low confidence levels. But when asked about their ability to make decisions 20 years from now, 42% say they’re not confident.”

“With 2.5 million Australians approaching retirement in the next decade, it is essential that we do everything to ensure they are well equipped for the realities of life after work,” Jones says.

“By offering members retirement income solutions that provide the certainty of an income for life, regardless of how long they live, superannuation funds can help more members move confidently through the different stages of their retirement.”

Click here for the whitepaper TAL has published based on the research for superannuation funds, What I Wish I Knew: Insights into the Financial Needs of Australian Retirees.