Drastic decisions ahead for soon-to-be retirees
Many older Australians will have to resort to drastic measures, including selling their family home, in order to afford even a very basic standard of living in retirement.
These are the dramatic findings of the latest joint research initiative betweenAMPand the National Centre for Social and Economic Modelling (NATSEM), released today.
Launching the report, AMP Financial Services managing director Andrew Mohl says it would be debatable whether people in the 50-64 age group today would have enough money to even meet their future long-term health and aged care.
“The research we launch today doesn’t paint a rosy picture for many of the Australians aged 50-64,” Mohl says.
“And that provides some legacy issues for the next generation who, instead of benefiting from their parents good intentions about being able to leave some wealth behind as an inheritance, are likely to be left instead with a bill.”
The report, which focussed specifically on the income and wealth of 50-64 year olds, found on average this age group accumulates $240,000 over their lifetime, with the majority of this being locked into the family home.
The estimated average income from all sources for this group, the most important of which remains employment, is just $29,000 per year, the report found.
According to the report, funding for retirement is unlikely to come from superannuation, with average balances of around $56,000 for people in this age group.
“Even with top ups from other savings and the age pension, the most likely outcome is that many of these Australians will have to curb their lifestyle,” Mohl says.
“Another likely outcome is that they will start to run up some big bills related to long-term health and aged care as they grow older.”
One of the solutions to this problem could be to sell the family home and realise the capital that is effectively locked away in the asset, despite the emotional attachment and status Australians give to property ownership, Mohl says.
“With half of their wealth tied up in their homes, it is a decision many in this age group will have to make.”
Recommended for you
Data and technology provider Novigi has acquired Iress’ superannuation consulting and managed services business from Apex Group.
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
