Alarming statistics from the Financial Services Union reveal a huge gap in retirement savings for those who live past average life expectancy.
With males now living to an average age of 79 and women to 84 – up from 73 and 80 respectively in 1992 when the superannuation guarantee was introduced – most Australians will find themselves short of money when they retire.
The analysis found a male aged 47 earning $87,500 will retire at 67 owning his own home and with $98,000 in super – short $432,700 on the amount he’ll need to live comfortably in retirement.
The figures are more daunting for women – an 18-year-old female earning $34,507 will take a five-year break before retiring at 67 with a shortfall in her retirement savings of $771,200.
Worst off are males and females currently aged 25 to 29, who by the time they reach retirement will have a much greater average life expectancy than older generations.
Financial Services Council CEO John Brogden said every five years life expectancy increased by one year, excluding medical breakthroughs.
“The number of people who live beyond a century will grow exponentially, that is people who will retire at about 65 and live for another 35 years,” he said. “So you’re looking at a situation where more and more people will be retired for the same amount of time they worked. Our system hasn’t been geared for that.”
He urged government to consider revising the current superannuation preservation age of 60, when a person can access their super.
“Currently, many Australian’s have to wait seven years from the time they retire to the time they can access the age pension,” added Mr Brogden.
“Reducing this time to five years will ease the financial pressure for Australians.”
On Friday, Superannuation Minister Bill Shorten will hold talks with industry representatives to discuss post-retirement policy issues to address this savings shortfall.
Mr Shorten said new laws to increase the universal superannuation rate from nine to 12 per cent were a step forward.
“Those of us over 65 now are only three million in number, but by 2050 there’ll be 8.1 million of us,” he said.
“So it is this government’s sincerest belief that superannuation of 12 per cent, and a stronger wealth management system, will progressively bridge the savings shortfall and see Australians’ retirement is more secure and comfortable. “We will also make the system fairer by ensuring no tax is paid on the superannuation contributions for lower income Australians earning up to $37,000.”The average retirement lump sum of someone aged between 60 and 65 is about $245,000 for men and $170,000 for women.