It’s becoming abundantly clear that the dream of retiring comfortably using superannuation has become increasingly out of reach for many Australians.
YouGov research commissioned by wealth platform Dacxi has found that more than half (54%) of Aussies don’t believe they’ll ever be able to retire comfortably using their superannuation.
These findings are troubling, and perhaps something of a surprise, particularly given that Australians have $3.5 trillion invested as superannuation assets, making us the 4th largest holder of pension fund assets in the world.
But superannuation hasn’t been immune from downward economic pressures, and just last week data from Rainmaker Information showed that single-strategy, default workplace superannuation products are expected to deliver a median loss of 2.8% for the 2021-22 financial year.
Optimism is falling
The results from the research that Dacxi commissioned reinforce the fact that Aussies are losing confidence their super nest egg is going to be sufficient to fund retirement.
Optimism is particularly low when it comes to Australians who believe they’ll be able to use super to retire comfortably by the traditional age of retirement – only 29% of Aussies say they would be able to retire comfortably on their superannuation by the age of 65.
The Association of Superannuation Funds of Australia (ASFA)’s estimate of annual expenses for a couple retiring comfortably at 65 is $64,771 a year (if you own your own home).
Women are more likely than men to be pessimistic about their superannuation, with 64% saying they can’t rely on their superannuation to retire comfortably compared to 45% of men.
Queenslanders meanwhile are the most pessimistic, with 65% of residents saying they can’t rely on their super to fund retirement, while the least pessimistic state was South Australia, with 41%.
At least those Aussies who are unhappy with their superannuation performance are remaining engaged, which can’t be said for a shocking number who have disengaged to the point that they don’t know how much super they have.
Only two in three (66%) Aussie adults are aware of how much money is in their superannuation fund, and 12% admit they do not know how much they have and don’t check regularly, while 22% of Australians say they do not currently have a superannuation fund that they are aware of.
Gen Z’s with a superannuation fund (29%) are more likely to not check their superannuation regularly and be unaware of how much they have, compared to Millennials (18%), Gen X (10%) and Baby Boomers (6%) with a super account.
That’s a fair chunk of change to need to see out your years in relative comfort – which could be why there are so many of us who are looking at what they have in their super, and wondering how we’re expected to make that last.
We’re living longer, inflation is a huge concern – and if superannuation alone isn’t the answer to building wealth for retirement, then what alternatives are Australians turning to?
Optimism is falling… fast
“23% of Aussies said having a high performance investment strategy is the best indicator of their ability to grow wealth,” Dacxi CEO, Ian Lowe, said.
“Equally, only 5% of Aussies agreed that having a financial planner is a good indicator of one’s ability to grow wealth. There’s a number of factors that contribute to this, including the cost of financial advice.
“But the other known factor that’s less easily quantified is the accessibility of both financial education and suitable investment opportunities. The recent Royal Commission into Banking, Superannuation and Financial Services has eroded trust for many.
“On top of that, the world of investing has changed significantly in the last few years. The everyday Australian can now access tokenised precious metals for example. Gold has been used to hedge against inflation for decades, and is even more relevant for diversified investment with so much uncertainty in equities, bonds and other asset classes.
“Tokenised gold and other precious metals comes with storage, independent custodianship and insurance baked in, making it safe and accessible to everyone. How many financial advisors are knowledgeable of these strategies today?”
Generational wealth transfer looks set to play its part in the path to wealth and retirement for many into the future. In fact, the best indicator of an Australian’s ability to grow their wealth is family wealth/inheritances (24%), while more than one in three (35%) respondents said they are taking into consideration any inheritance(s) from any family members when calculating their own retirement. Outright property ownership was considered the best indicator of ability to grow wealth.
“When it comes to wealth in retirement, our research indicates that most Australians are now relying on their own investment knowledge and the wealth of their immediate family to reach their retirement goal,” Lowe says.
“The first takeaway is that superannuation alone is widely believed to not provide for a comfortable retirement. Investors are more motivated than ever before to explore new strategies and invest across a broader spectrum of asset classes.
“The second is the need for access to sound financial educational resources that will help investors make informed decisions.”
Dacxi is a global technology company that empowers everyday investors to participate in the growing digital assets market. Its purpose-built platform provides access to a curated set of digital assets and asset classes, allowing investors to quickly and easily build and manage their investment portfolio. Dacxi is a global organisation with operations in Australia, New Zealand, UK, Europe, Brazil and Singapore.
This article was developed in collaboration with Dacxi, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.