Less than a quarter of Australians believe their retirement savings will be enough to provide them with an income for life, despite a recent Grattan Institute report suggesting most Australians will have “more than enough” to last.
A survey of more than 200,000 older Australians conducted by retiree advocacy platform YourLifeChoices found only 23.4 per cent are confident their savings will support them for the duration of their lives.
These findings undermine a Grattan Institute report released on November 6, according to YourLifeChoices publisher Kaye Fallick, who added parts of the report are “factually incorrect”.
“They say [Australians] are retiring with more than enough, they’re not. Many Australians are retiring on very little,” she said.
Specifically, the report failed to factor in longevity and the cost of aged care and medical needs, Ms Fallick said. These two factors contribute to Australians’ fears about running out of money in retirement.
Additionally, Ms Fallick said the report’s focus on average balances masked underlying challenges that face lower-income Australians, which using median balances would have highlighted.
Ms Fallick’s comments are the latest in a series of criticisms levelled at the Grattan Institute’s report, with a series of senior superannuation figures questioning its recommendations.
Dr Martin Fahy, chief executive of the Association of Superannuation Funds of Australia, even suggested the institute wanted to “dismantle our world-class retirement funding model”.
Grattan stands by report
However, chief executive of the Grattan Institute (and co-author of the controversial report) John Daley defended the recommendations and said he was disappointed with the response it has received.
Mr Daley said a number of the criticisms were ad hominem attacks, and accusations the organisation has it out for Australian retirees are unfounded.
“We don’t have a dog in this fight,” he said.
“At the point where someone’s playing the man rather than the ball, you usually know something about the quality of their argument.”
Mr Daley dismissed the argument the report turned a blind eye to medical costs, and said the government is “on the hook” for a lot of the expenses typically incurred by Australians.
Further, Mr Daley said while using average balances for the whole population would indeed disguise certain problems, the report actually used average balances of specific income percentile points, which he said eliminated this problem.
Balancing retirement with life
Mr Daley accepted some of the recommendations made by the report would result in retirees having smaller savings pools than they might achieve under current arrangements, but said this was part of a tradeoff.
“If we’re going to have more money in retirement, then by definition we’re going to have less money in our working life,” he said.
“The art of retirement incomes is finding a balance between these two, and this is what we’ve done.”
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