Australians are retiring later than many of their OECD counterparts and the country’s overall position on the Natixis Global Retirement Index has slipped two positions to seventh of 44 countries for 2023.

However, while Australia’s overall ranking in the GRI for 2023 fell, it scored a higher overall score of 78 per cent compared to 75 per cent in 2022.

Australians now expect to retire on average at 65.5 years of age compared to 64.5 in the US and 62 in France, rising to 64 from 2032.

For the European Union as a whole it is 64.3 for men and 63.5 for women, according to EU and OECD figures.

However, funding retirement is a concern for older people globally.

The GRI rankings, which were created in collaboration with CoreData Research, looked at four segments to evaluate the overall retirement position. They are finances in retirement, material wellbeing, health and quality of life.

The six countries outperforming Australia were Norway, Switzerland, Iceland, Ireland, Luxembourg and the Netherlands. Australia has ranked in the top 10 since the index’s inception in 2012.

Although Australia came in at No.7 overall, it performed highly in some segments.

In the finance for retirement segment, which measures population ageing, national finances and governance measures Australia came in at No.3, with Natixis praising the superannuation system.

The system, which manages over $3.4 trillion in members’ funds “constantly ranks among the best pension systems globally,” the report said.

Australia has the third-highest ratio of retirement assets to GDP among G20 countries and the Superannuation Guarantee has driven strong member outcomes since its introduction in 1992.

Non-financial indices not so good

However, in non-financial areas the country lagged, coming in at No.13 for material wellbeing – due largely to inequality.

That category measures income inequality, unemployment and income per capita.

On the health index, which measures health spending and life expectancy, Australia came in at No.9.

And glaringly, Australia lagged at No.15 in the quality of life sub-index, which measures air quality, environmental factors and happiness.

Australia scored strongly in financial measures, but it seems that years of good returns for superannuation and other investments have skewed expectations.

Globally the survey found that investment return expectations were 12 per cent higher than what investment professionals expected, but for Australia the expectations gap was 64 per cent.

Australians expected to earn 11.3 per cent on their investments, while the experts tipped they could expect 6.9 per cent.

Regardless of those figures, many Australians are realistic about their retirement prospects.

In a recent survey carried out by National Seniors Australia some 53 per cent of over-50-year-olds said they thought they would outlive their savings, and 85 per cent of those were worried about that.

Many Australians plan to retire at 65.5 years unless they are retrenched, but many are not actually making that mark.

Most still need the pension

“We are retiring later because the pension eligibility age has gone up to 67 because the majority of people who do retire are still [at least in part] dependent on the age pension,” said Paul Versteege, policy manager at the Combined Pensioners & Superannuants Association.

A significant number of people retire before the age pension kicks in and rely on superannuation to carry them through.

“When the pension age was 65 people might retire, say, at 60 but now that it is 67 you’d have to add a couple of years to that,” Versteege said.

To retire before pension age if you are going to ultimately rely on the pension requires some planning.

“But as recent surveys have shown us Australians are not very good at retirement planning and a significant number have no idea how they will finance their retirement,” Versteege said.

One option for people retiring is to continue part-time work.

Currently only 15 per cent of Australians over 65 work compared to 25.1 per cent in New Zealand. Versteege said that recent increases in the work bonus have not resulted in big increases in the number of retirees working.

“What people don’t realise is the pensions paid in the US and New Zealand are much lower,” Versteege said.

At whatever age you plan to retire you need to do some thinking and planning beforehand.

“People need to realise that their money will need to last a very long time through retirement,” Steps Financial principal Antoinette Mullins said.

Keep super growing

That means don’t put all your retirement funds in defensive assets.

Keep most of your super in growth allocations so it will increase even as you draw a pension.

“I always tell clients that they should hold at least one year’s pension in cash so they don’t have to sell growth assets when markets are down,” Mullins said.

It can also be advisable to retire slowly through a transition to retirement pension that will allow you to reduce working hours while still making super contributions.

Also think about how you plan to fill your time in retirement.

“If you don’t have anything to get up in the morning for, it’s challenging,” Mullins said.

“You have to work on your hobbies and friendships so that you can pick them up in retirement.”

The New Daily is owned by Industry Super Holdings