AMP : Australians financially illiterate when it comes to retirement

• Australians aged 50+ lack understanding about critical aspects of retirement finances
• Likely contributing to underspending and impacting lifestyle

New research by AMP shows that most older Australians find it challenging to navigate our retirement system and lack knowledge about fundamental aspects of managing their retirement finances.

For Australians aged 50 and over the research found:

• 3 in 4 find the retirement system complex
• 2 in 5 don't know if they'll be eligible for aged-pension benefits
• 7 in 10 don't know what an account-based pension is
• 3 in 4 have not sought financial advice for retirement planning
• 3 in 5 wish they'd started planning for retirement earlier in life
• 3 in 5 are 'extremely concerned' about the rising cost of living

This lack of confidence is likely a key reason why Australians fear their savings won't last as long as they do, leading to underspending and an unnecessary impact on lifestyle in retirement.

The challenge is exacerbated by most not having sought appropriate financial advice and also made worse by the current high levels of inflation and broader cost of living pressures.

This problem is only set to grow with the latest Intergenerational Report showing Australians over the age of 65 will make up nearly one quarter of our total population over the next 40 years.

Retire with Confidence Whitepaper

To help address the financial literacy gap in retirement, AMP and its North investment platform has today launched its Retire with Confidence Whitepaper, which takes a closer look at the growing maturity of our superannuation system and the challenges faced by Australians heading into retirement.

It helps dispel common myths and misconceptions faced by Australians when it comes to maximising their income in retirement. Download a copy of it here.

AMP Chief Executive, Alexis George, said:

"This research shows the challenges faced by the growing number of Australians heading into retirement, a process they find complex and made harder by a lack of financial literacy.

"A staggering three in four older Australians are struggling with the complexity of managing their finances for retirement, with more than 40 per cent having no idea if they'll be eligible for the age pension or not. Seven out of ten older Australians also don't know what an account-based pension is - even though it is the main income-generating option for Australians in retirement.

"This lack of financial knowledge about retirement is despite Australia having one of the world's highest GDPs and the fifth largest pool of superannuation savings in the world.

"Lifting levels of financial literacy when it comes to retirement is a critical challenge for Australia, and one the Government and industry needs to collectively address.

"The research shows we need to improve access to financial advice and education programs, and there is a real need for more innovative, easy to understand income generating retirement solutions."

AMP's General Manager Retirement Solutions, Ben Hillier, said:

"Australia is looked at rightfully by the rest of the world as having a sustainable, competitive and successful superannuation accumulation system. But there's still much work to be done to improve the decumulation retirement phase and the conversion of our significant superannuation savings into retirement income.

"This research highlights a knowledge gap when it comes to retirement, but we also know that traditional retirement solutions have some inadequacies. They either expose people to the fear of running out of money in retirement, or they provide levels of income which are too low.

"The combined effect is that retirees lack the financial confidence to spend in retirement and are living more frugally than they need to.

"We want to improve the standard of living for retirees and give them the peace of mind that their savings won't run out."

How to build retirement knowledge:

• AMP's Insight Hub provides valuable information about both preparing for and managing finances in retirement.
• AMP's biennial Financial Wellness report provides some great insights around how to improve your financial wellbeing.
• AMP's Simplifying Investing podcast series offers access to two of Australia's leading economists in AMP's Dr. Shane Oliver and Diana Mousina, as well as industry experts such as AMP's Ben Hillier. You and access the latest episode here and sign up to the blog.
• Access Moneysmart.gov.au and its various resources to help you plan for retirement.
• Speak to your superannuation provider, which should be able to offer resources which help with your retirement knowledge.

^{About the research AMP commissioned Dynata to conduct an online survey of the Australian population 50 years and over regarding their attitudes to retirement. Data from more than 1,000 respondents was collected in August 2023. The survey was conducted to understand the priorities of Australian retirees and pre-retirees when it came to retirement and the level of confidence older Australians have with retirement planning.}