Australians have lower retirement expectations but better retirement incomes

Australian women are less retirement ready than those in the US and UK.

Australian women are less retirement ready than those in the US and UK. Photo: Getty

Australians have  lower retirement expectations than comparable people in the USA and UK, according to new analysis by actuary associations across the three countries.

The survey found that only 23 per cent of Australians expect to retire fully compared to 32 per cent of Americans and about 27 per cent in the UK.

However, when it comes to retiring in any shape or form, Australia is mid-range with just over 70 per cent planning to take some sort of retirement. That is less than Britain’s 75 per cent but well above the USA’s 60 per cent.

Australia’s retirement system will leave people better off than those of the other two countries because it will replace a higher percentage of their working life income in all three income categories used in the survey. The picture looks like this:

Of Australians planning to retire, around 46 per cent expect to have a comfortable or prosperous time compared to 47 per cent in America and only 36 per cent in the UK.

The survey demonstrates that many people will lack the wherewithall to retire completely. “While some of these respondents may be choosing to continue working as a lifestyle choice, many are likely feeling financial pressure to continue working, and do not foresee a time when they will be secure enough to retire,” the report found.

“Even more striking perhaps are the small percentages of those who do plan to retire who expect to retire fully as opposed to gradually; only a quarter of all respondents indicate plans to retire fully.”

The difference between the retirement readiness of men and women is stark: “Sixteen percentage points more men than women expect a flourishing or comfortable lifestyle in retirement (50 per cent compared to 34 per cent).”

The gap exists in similar size in all three countries (15 percentage points in Australia, 14 in the UK and 18 per cent in the US).

Overall, 47 per cent of men were preparing to retire compared to 34 per cent of women, but the gender gap is highest in Australia at 22 per cent. Around 70 per cent of people are married when they retire so the gender gap has the largest financial burden on single female retirees.

Not unsurprisingly, more higher income earners plan to retire than their low income counterparts. Overall, 57 per cent of lower-income respondents could envisage retirement compared to 76 per cent of middle-income earners and 85 per cent of higher-income respondents.

For higher-income individuals, the percentages in the three countries are similar (81 per cent in Australia, 82 per cent in the United States, and 86 per cent).

In all three countries only a small minority of people were actually aware of how much they would need in retirement. A total of 31 per cent of United States respondents and 30 per cent of Australian respondents claimed to know how much they would need, while 19 per cent of United Kingdom respondents claimed to know.

Very few respondents are ready to face an unexpected early retirement, with those believing they would still have sufficient retirement income ranging from 32 per cent in Australia to 27 per cent in the US to 21 per cent in the UK.

“The survey, of working-age individuals across three countries, shows people have remarkably similar expectations,” Australian Actuaries Institute president Jenny Lyon said.

“A great number of people expect to rely, in part or in whole, on some form of government payment during their retirement. 58 per cent  of respondents expect to live a poor or modest lifestyle during retirement. We are immersed in an era of diminished expectations compared to the period even two decades previous.”

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