New research by National Seniors Australia and Challenger has revealed a growing concern from older Australians over the rising cost of living, with four in five claiming it has negatively impacted their lifestyle and wellbeing.
As such, The cost of living and older Australians’ financial wellbeing study highlighted the significance of having access to financial advice both in the lead-up to retirement and during retirement years.
The report also underscored that affordable and accessible financial advice, products, and services are required to address the cost-of-living pressures for people moving into and through later life.
Challenger’s head of retirement income research, Aaron Minney, stressed that after nearly 30 years of relative stability in the cost of living, “retirement planning and financial advice must better address the potential effects of inflation in undermining people’s control over their finances”.
This aligns with recent reports indicating that the government is poised to publish a consultation paper in the coming weeks, aimed at enhancing the accessibility of retirement products.
This new paper, announced by Treasury, is expected to canvass problems with financial advice, among other things.
Namely, while the government’s recent intergenerational report revealed that total assets in the superannuation system are expected to continue to grow strongly over the next four decades, there is concern over a noticeable reluctance among Australians to tap into their retirement savings.
This was echoed by Challenger and National Seniors Australia, with their research highlighting an increase in older people worrying over outliving their savings compared to previous studies.
To manage this concern, 83 per cent of respondents expressed the desire for long-lasting financial security, with a top financial priority for most being income that keeps pace with inflation.
Moreover, regular income for essentials (91 per cent) and being able to afford care and medical costs (86 per cent) were also crucial to achieving long-term confidence.
“Financial wellbeing is critical to quality of life in older age and rapidly increasing living costs are undermining the financial wellbeing of retirees,” Mr Minney commented.
“Finding ways to mitigate worry and give greater confidence that they will always have the income to meet these essential expenses will improve people’s wellbeing and quality of later life.
“A guaranteed and adequate income stream provides a lot of reassurance and comfort to older Australians battling rising costs.”
This sentiment was mirrored in Vanguard’s inaugural How Australia Retires study, released in May, which revealed that having a financial plan and access to advice are the main drivers of confidence among Australians in retirement.
Namely, Vanguard said that almost two in three working-age Australians have never engaged a financial adviser to help map out their retirement strategy. Among the Australians who have never sought professional advice, 75 per cent reported not being confident in being able to fund their retirement.
On the flip side, 44 per cent of Australians surveyed who have received professional financial advice were extremely or very confident in funding their retirement.
