Why Australian Retirees aren’t happy?
An international survey highlighted that Australian retirees are less satisfied than retirees in Canada, the United Kingdom and the United States.
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Paul Murphy speculates that it is due to the complexity of options within the Australian retirement system. Our retirement funding model, whilst lauded around the world, does have its complexities. Murphy argues that, as behavioural scientists have demonstrated, increased choice does not necessarily lead to increased happiness.
If the survey was conducted during 2017 I would have attributed the lower satisfaction level of Aussie retirees to the two changes to the Age Pension implemented on 1st January 2016 and 1st January 2017. These changes reduced or eliminated Age Pension entitlements for 100,000’s of pensioners. However, the survey was conducted in 2015, prior to 2016/17 changes.
When I look at the analysis, I believe the more important finding is that pre-retirees are a less satisfied than recent retirees. To some degree this is an obvious statement, i.e. you don’t retire until you have met your retirement goals, and until retirement goals are achieved, there will be some dissatisfaction and some associated angst.
The most common question that pre-retirees and recent retirees ask me is, “do we have enough to provide for our short and long-term needs?” Once we have modelled their situation and run through some possible retirement scenarios, many feel more confident about their financial position. Numerous clients have teared up with the knowledge they “will be okay” financially when they retire, such is the stress associated with the uncertainty of not knowing.
A common view amongst pre-retirees is that if they had more funds available they would not feel such insecurity or concern, but this is not my experience. There is as much angst experienced by those with relatively more funds as those with relatively few.
One other interesting point highlighted by the survey was a high proportion of Australians thought they should have saved more, planned earlier and learned more about their superannuation.
Figure – Retiree lookback
In retirement, other than your home, the next largest asset, and the asset that determines your retirement income is usually superannuation (held in the pension phase). Many people don’t’ realise this until after retirement. 33% of recent Australian retirees stated they should have learned more about their superannuation earlier.