With retirement just around the corner, you might be starting to think seriously about how much you have in the bank to support you after giving up work, however new research has surprisingly revealed that it isn’t older Australians who are most concerned about how much money they have set aside for a rainy day.
The study, carried out by Suncorp, revealed that those aged 55-plus actually save less money than other age groups, with a third of older Aussies setting aside less than 5 per cent of their income, compared to the national average of 19 per cent. In fact Suncorp’s Best Saver report, released on Thursday, found that over-55s are the least likely to save at all, compared to younger generations.
Despite their reputation for spending all of their cash on smashed avocado, Generation Y – otherwise knows as Millennials – actually emerged as the country’s most savvy savers, with the average Aussie youngster (in this case, those aged between 18 and 34) sets aside 32 per cent of their income. In comparison, the average Australian was found to save just 23 per cent.
Chris Fleming, from Suncorp’s Consumer Banking department, said it was great to see that Australia’s younger generation is setting themselves up financially. He said: “Many in this age group are likely to be enjoying an increase in their income as they finish university or build their career, while still having the flexibility of fewer big financial commitment – a strength which generally stops
as you get older.
“It was interesting to see the top savers in this younger age group were motivated by tangible goals – buying their first home, investment property or shares, which goes against the common assumption that this generation has given up on the great Australian dream of home ownership.”
The report also revealed that two in five Australians manually move money from their current account into their savings each month, however over-55s were found to be more likely to rely on automatic transfers between their accounts.
Suncorp also found that two thirds (64 per cent) of respondents classed themselves as being satisfied with their savings efforts, with Baby Boomers and those with no kids under their roof emerging at the most satisfied. Almost three quarters (73 per cent) of over-55s were pleased with the amount they have in savings, which is perhaps surprising considering that the older generation put away the least.
Another interesting point to emerge from the study is the difference in savings goals across the generations. Over-55s mainly save for holidays or trips overseas (43 per cent) or deposit money into a ‘rainy day’ fund (37 per cent). However they – understandably – are less likely than other age groups to be saving for an investment property or a new or bigger home (2 per cent, compared to an 11 per cent national average).
“People view their budgets in dollars and cents, and generally as we get older even though the dollar value saved may get larger, as the research showed us the percentage of our income saved gets smaller,” added Phil Slade, a behavioural economist with Suncorp.
“If we think of our savings as a percentage rather than a number it could trigger a change in behaviour later in life – the 80/20 rule is a great example. With the 80/20 rule if your earning capacity changes, you will continue to contribute the same percentage of your salary to your savings or investment goal.”
The report also outlined the country’s savviest saver, who was described as being: “An 18-34 year-old female, with no kids, living in NSW, working full time, who is focused on a tangible goal (property, shares), frequently entertains friends at home, uses tap and go or Apple Pay for purchases, brings lunch to work and shares a family or friend’s streaming subscription to save money tends to be Australia’s best saver. People who fit the best saver profile, are generally confident about their own understanding of money and finances.”
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial situation, objectives or needs. That means it’s not financial product advice and shouldn’t be relied upon as if it is. Before making a financial decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services advice.