Retirees blow national savings budget

OLDER Australians are putting aside less private cash savings for retirement and running into more debt in their pre-retirement years, leaving the nation in a tenuous position for the future, according to the Financial Planning Association (FPA).

In new qualitative research released this week, the FPA has shown that three-fifths of pre-retirees were not saving, and increasing numbers would need a proportion of their superannuation to clear debts rather than finance their retirement.

FPA national manager of policy and government relations Con Hristodoulidis says the results show more people are retiring early between the ages of 50 and 64, leading them to draw on their superannuation to pay off debts.

“We have got a superannuation system that is based on encouraging retirement savings, but people are using the money for debts, which defeats the purpose,” Hristodoulidis says.

The report, the second in a series of papers prepared by the National Centre for Social and Economic Modelling (NATSEM) for the FPA, shows general savings in Australia have steadily decreased since 1999, with less than half of all households reporting they were saving in 2001.

A key finding of the research was that younger Australians are managing to save more than older people because they have many short-term savings goals.

Hristodoulidis says this fact will be the basis of developing the FPA’s policy on savings.

“We have to try and string these motives out along their lifetimes — if they have savings goals embedded into them, we can turn around the savings culture of our community.”