Australians are failing to plan ahead for their golden years, with AMP reporting that projected retirement savings have fallen
The AMP Retirement Adequacy Index, reports that the retirement adequacy of working Australians has fallen 2% to hit 69.4%, while projected retirement savings fell 7% to $492,000.
Driving these falls was a significant drop in super top-ups, with the average worker’s contributions falling to 12.3% of their salary – the lowest level recorded since the index began in 2006. This fall was mainly down to a drop in voluntary contribution rates, said the report.
“The index shows salary sacrifice contributions have fallen across most age groups, particularly for older Australians who traditionally put more into their superannuation as they approach retirement, but are now restricted by caps on voluntary super contributions or worried about global markets,” said AMP Financial Services MD Craig Meller.
“Consumer caution is also continuing to impact investment behaviour, post GFC, according to the index so it’s important our industry continues to focus on educating customers about the benefits of super as a long-term savings strategy – offering individuals a wide range of investment options, including cash, and tax effective long term returns.”
Key findings included:
Overall retirement adequacy took a hit in the last six months of 2011, falling from 71% to 69.4%.
The average worker today can expect to retire on just under $49,000 per year which is largely unchanged from the corresponding projection in June 2011.
Overall, the projected super benefits for an average retiree fell by 7% to $492,000. This drop, as a result of lower contribution rates, was enough to eliminate the projected gains expected from the introduction of the 12% super guarantee.
Average contribution rates fell by 0.2% in the second half of 2011. Contributions from older workers fell over the period, although encouragingly younger age groups, in general, increased their overall voluntary contributions.
Average balances for females fell less than that of males over the period, causing the gap between genders to narrow. This may reflect different attitudes towards investment risk.
The report used data for the six months from June 2011 to December 2011 from more than 280,000 AMP corporate superannuation customers to predict retirement adequacy based on 65% of an individual’s pre-retirement income. The data factors in the increase in the superannuation guarantee from 9% to 12%.
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