The MFS Investment Management’s 2024 Global Retirement Survey has revealed this is a major factor leading to a quarter of Australians changing their retirement investments over the past 12 months.
The survey found that overall confidence in being able to retire has significantly risen in Australia, but 75 per cent of superannuation fund members agreed they needed to save more than planned.
More than 700 Australian retirement plan members and, for the first time, over 300 retirees were interviewed as part of the global study spanning similar cohorts in Canada, the US and the UK to gauge pre- and post-retirement sentiment.
Additionally, the survey found the number of Australians who no longer expect to retire significantly dropped, from 40 per cent in 2023 to 28 per cent this year showing a marked improvement in retirement confidence. However, only 23 per cent were very sure they’d be able to retire at the age they wanted, down from 26 per cent in 2023.
Furthermore, in the next 12 months, 49 per cent of Australians said managing day-to-day financial obligations was their top concern, far more so than their global peers, which affirmed that costs of living in Australia were being felt acutely heading into 2025.
The survey also revealed that confidence was higher among retirees drawing down on their super, with 38 per cent very confident that their saved assets would provide sufficient cash flow through retirement.
Predictability of payments continued to rank as the most important retirement portfolio priority in line with global peers, yet the study found that 59 per cent of local retirees spent less in retirement than they did during their working years.
While the Australian government has recently announced a raft of measures aimed at improving the quality, affordability and access of advice, including within the superannuation segment, initial movements among superannuation funds to provide limited advice appear well received.
Around 55 per cent of all super contributors relied on information supplied by their super funds to make retirement decisions, followed by financial media (31 per cent), a family member (30 per cent) and a financial adviser (29 per cent).
Australian Millennials are most likely to turn to their super fund for advice, as well as to use financial media. Almost one in five local Gen Xers said they don’t use any resources for financial advice.
The study also affirmed that 51 per cent of Australian contributing members believe long-term retirement investing means 10+ years but revealed some misconceptions about the risks of passive investing.
It found that 65 per cent of Australians agreed that actively managed funds can choose stocks and bonds that may generate better returns than the overall market, but 61 per cent of Australians surveyed said passive funds are less risky than the overall market, and 29 per cent said passive funds usually have better returns than the overall market.
Josh Barton, managing director and head of Australia and New Zealand at MFS, said it is concerning to see in the survey results how few Australians rely on financial advice to manage their financial affairs.
“Whilst it is encouraging to see the government trying to address this blind spot and enable more advice to be provided within superannuation, there is clearly much work to do, and clarification needed,” he said.
“Meanwhile, critical understanding gaps are likely to persist, such as those discovered by our survey in relation to the risk and performance misnomers associated with passive investing. While more retirement plans appear to be within reach, advice remains key to achieving it, even more so today given investment markets have become increasingly complex and difficult to navigate.”
