The toughest time to retire is right now 23



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Global interest rates are as low as they have ever been. According to the latest Reserve Bank of Australia (RBA) data, in the US, UK and Japan interest rates are effectively at zero per cent. Across much of Europe, investors are actually paying the government for the privilege of lending to it financial worries are so great. And in Australia, our interest rates are at the lowest they have been for more than 50 years. We’re all living in an interconnected world and Australia is far from immune to global woes. Low interest rates mean a tougher environment for Baby Boomers to grow their wealth, and live off their returns. And it is possibly the toughest time for retirement Baby Boomers will see.

Many baby boomers were enjoying the boom and getting excited about their possibilities for a moderately affluent retirement when the GFC came along and changed everyone’s attitude to risk. People moved out of risky assets in droves, some too late as their values declined. But as the crisis subsided, attitudes to investing evolved. Some Boomers were confident enough to re-enter the market investing in property and shares. The prices again rose, and today we see a market with relative confidence in which many are prepared to take risk again.

But some have not recovered so well, or have not had the chance to invest in growth assets for a long enough period of their lives to build a solid capital base that they can generate an income from. Today’s baby boomers only started building their superannuation savings in 1993, so will be the generation to benefit least from it as it emerges as a dominating force in the financial industry, even more so than today over coming years.

The average superannuation fund balance for today’s retirees at retirement age is sitting well below what is considered adequate for retirement. Men have on average $197,000 dollars in their fund, and women just $105,000. This number is expected to grow as today’s younger boomers have more time to accumulate their savings before retirement. But for those already there it is a tough environment we can only offer support for.

According to The Association of Superannuation Funds of Australia (ASFA), the suggested superannuation balance for couples wanting to live a comfortable retirement sits at $510,000 and for a single sits at $430,000. It doesn’t take a degree to work out that today’s retirees have less than half or even a quarter of what they need.

And the realisation has all of the financial industry talking about what we can do about it to help those affected – you. It relies on the fact that retirees will need to seek support and guidance to get the best out of what they have.

  1. Retirees are going to need access to growth assets to fund their retirement – particularly to fund their retirement for 30 years. Despite this many are heavily invested solely in conservative assets which could simply underperform and challenge their financial circumstances even more.
  2. Retirees need to be aware of developments in the broader markets, and how their investments might turn out in different market scenarios (a good understanding of their capacity to take on some risk, if any) – and work with a financial adviser to map their income and expenditure properly and honestly to get the best out of their planning and financial management over and up to a 30 year retirement.
  3. Be alert to the fact that retirement solutions are being enhanced and further developed that will support this growing demand for surety and growth in retirement. We are seeing a number of new products that are being designed with retirement pressures of growth, income and risk management in mind. There has never before been a retirement generation that has demanded this and it is only now that the needs are strong enough to drive many financial companies to further support them.


How do you feel about the financial challenges facing you in retirement? Do you feel like you could be part of the toughest retirement circumstances for future decades?

This article is intended to provide general information only and has been prepared without taking into account any particular person’s objectives, financial situation or needs. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain financial advice specific to their situation before making any financial investment or insurance decision.


For more information contact MLC by clicking here.

Shaune Egan

Shaune Egan is Head of Retirement Solutions, Segment Development at the National Australia Bank, focused on developing retirement strategies and solutions for financial advisers and their clients. Shaune holds an MBA from the Melbourne Business School, a Graduate Diploma in Applied Finance and Investment, a Diploma of Financial Planning (DFP) and a Retirement Management Analyst (RMA) certification from the Retirement Income Industry Association (RIIA). He is Fellow of FINSIA and Graduate Member of the Australian Institute of Company Directors.

  1. chatted over lunch with a US citizen – someone had asked ‘what to do with $600k’ – others suggested UBank at 4% – I suggested shares – I bought NAB on a dip recently which has gained 11% in 5 months – so better than bank interest – by maybe 5 times

    anyway – US friend said ‘4% is amazing – US pays like 1%’ – I replied that Japan may have negative rates – you pay them to store your money.

    so – in the world’s wealthiest country by median individual wealth – we can complain – but compared to most anywhere else – we’re doing pretty well …

  2. I’m coming to think we should invest in sustainable resources. At least that way we will be supporting something that’s good for the planet!

  3. Dont agree, depends on preparation earlier in life or we blaming govt again for our incompetence

    6 REPLY
    • Not blaming the government or anyone else but everyone has walked a different life path and perhaps not one they would have chosen. Circumstances are not always perfect

    • That’s true Cheryl Andrews, some people have had bad luck, but the majority of people have not taken responsibility for providing for themselves in retirnment or even tried increasing their super by adding to it over the last 23yrs but have just thought the pension would support them, I feel sorry for the ones that due to health problems or loss of employment ect that find themselves low on money when they retire, but the majority of people have not taken steps to help themselves be it through adding even just a small amount each pay to their super or other means of saving, our parents or grandparents never had compulsory super….no I don’t think our generation has the toughest retirnment as the article says

    • Lyn I agree with you.The ones who had personal struggles do have Pensions in Australia.No one has it easy unless born a millionaire , it’s about very hard work & going without a lot in earlier life.

    • I’ve worked hard all my life,lived within my means too but still won’t be able to fund my own retirement.

    • I think many of us are in the same position Bronwyn, not enough to fund our own retirnment but having a good bit of super behind you to fall back on & top up our pension makes it a lot easier, I was surprised when I looked into it how much you can draw on super without affecting the pension.

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  5. Some of us were not able to plan for huge sums of money due to unavailability of good superannuation, lack of information, the position of women in the community and many other factors. People expect so much more out of retirement and live much longer. The goalposts have moved a long way in my lifetime. Families have also generally stopped looking after the elderly. This is a massive burden on the community. Please don’t talk about incompetence when you don’t know other peoples’ situations

    2 REPLY
  6. I can recall Paul Ketting saying that there would be a transition period from complete government funded pensions to self funded pensions. The exact time period escapes me. I would think that it would take some twenty to thirty years to complete the move. Though a complete transition would never be complete, as some people, due to their particular circumstances would never have sufficient funds to support themselves without government support. At this time it would be very naive of any government to think that everyone could completely support themselves on a self funded pension. I would suggest that a government retirement fund should have (should be) setup to cover this transition period and future requirements. It could be funded from private super companies.

  7. Mike here-it’s par for the course, I retired so it had to become hard. I always said during my working life that if I found a tonne of gold, shit would be at a premium tomorrow.

  8. When I was working 2 years ago I was only taking home $30,000 and paid all my bills and mortgage on that so Im used to living frugally!

  9. It’s only tougher than our Grandparents because we expect more than they did.They retired with barely the essentials ,having come through the War & Depression.My Grandfathers came out of retirement at 72 work very hard for the factory,s during the war.They also had to deal with the death of sons in POW camps. We have it good I feel.

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