Advice key to boosting retirement preparedness

A report by Brighter Super, in conjunction with Investment Trends, has revealed that less than a third (29 per cent) of pre-retirees feel prepared for retirement, down from 41 per cent in 2023, with rising costs (57 per cent) largely driving their financial concerns.

Among those who had not retired yet, only 5 per cent felt very well-prepared for retirement, and 23 per cent felt somewhat prepared, the lowest number in over a decade. Meanwhile, almost half (47 per cent) report feeling somewhat or very unprepared for retirement.

Notably, the report indicated that “seeking information or guidance about retirement [was] the biggest differentiator of retirement preparedness”, highlighting the necessity of financial advice in retirement planning.

Further to this, the report found that 61 per cent didn’t know if their super fund offered retirement income products and a third (33 per cent) were unsure what to do with their super once they reached preservation age.

Retirees also reported feeling ill-equipped to manage their super, with 22 per cent unsure of their current drawdown rate and a quarter currently without a pension account.

Contrary to the majority of the report’s findings, 60 per cent of retirees stated they were confident they had enough money for retirement, however, the proportion of retirees living comfortably dropped 7 percentage points in 2024 to just over half (53 per cent).

Furthermore, nearly half (47 per cent) of retirees felt they didn’t need any help with education on how to retire comfortably; however, 11 per cent wish they had sought out financial advice, or that they had done so earlier.

On the other hand, four in five pre-retirees said they would like more help and guidance in understanding retirement planning, ensuring they don’t run out of money, growing their super, and investment strategies.

Despite this, one-third of pre-retirees have yet to seek any retirement-related information and almost two-thirds have not even looked at their retirement balance or income projections.

Among retirees that had sought out retirement information, financial advisers were the primary source of assistance (39 per cent), followed closely by super funds (38 per cent). Meanwhile, one in five utilised family and friends as a source of retirement information, while 13 per cent consulted an accountant.

Brighter Super head of retirement Jennifer McSpadden said the report highlighted the role that financial advisers and super funds can play in helping more Australians feel secure in their retirement.

“The report makes it clear that inflation and cost-of-living pressure are having a major impact on both retirees and those approaching retirement,” McSpadden said.

“It reinforces the direct link between receiving financial advice and securing a better retirement outcome but finds a significant number of Australians have unmet advice needs.”