Baby boomers all over the country could find themselves in financial difficulty when they come to retire as they underestimate how much they will need to live on.
This is according to a new white paper released by REST Industry Super, which found that only 14 per cent of this generation feel financially prepared for retirement.
Of those polled, 70 per cent admitted they had not received any formal financial advice about their retirement, while a quarter are simply hoping they will have enough to fund their lifestyle once they finish work.
Chief executive officer of REST Damian Hill emphasised that there are some sizeable gaps when it comes to what people envisage for their retirement and what it will actually be like.
“In order to avoid disappointment for many, the financial services sector will need to work with government to educate and encourage people to plan and prepare far earlier,” he commented.
When asked what they thought would be a reasonable income for a comfortable retirement, the amount nominated by respondents was significantly lower than official estimates.
The Association of Superannuation Funds of Australia recommends that an annual income of $56,236 is necessary for couples and $41,090 for single people.
However, 49 per cent of singles and 61 per cent of couples believed they would need significantly less than this – almost half did not believe they would have to give anything up in retirement due to financial constraints.
Perhaps one of the most worrying trends to emerge from the survey was that many are apparently reluctant to seek financial advice.
Mr Hill noted: “While some see no need or handle their own affairs, many actually consider financial advice to be too expensive or not trustworthy.”
This is simply not the case, as a financial advisor will be able to help you make savings in areas you might not even have been aware of, therefore putting you on a strong footing further down the line.
Not only this, they can assess your finances objectively and offer solutions on how to maximise your assets.
Superannuation was revealed to be the main source of retirement income, although less than half of those surveyed said they had a good grasp of how much they had saved.
Many said they intend to take on part-time work during the transition to retirement, while a third of those in their 50s have financial dependents to consider when deciding whether or not to finish work.