Half of all Baby Boomers aren’t prepared for retirement

1 in 2 Baby Boomers aren’t prepared for retirement!

According to data from RaboDirect’s 2014 Financial Health Barometer the worrying reality is that more than half of Aussie Baby Boomers currently believe they’ll run out of money and need the aged pension, while many others will have to significantly scale back their lifestyle.

Retirement plansretire nest egg super

The survey asked participants what their retirement goals were.

Most older Australians consider staying healthy and active to be their primary retirement goal.

Now that’s interesting isn’t it?

Another good portion of retirees would like to travel – both overseas and around Australia – which requires a reasonably comfortable income.

For some, the plans are more modest: spending time with family; taking up a new hobby; doing volunteer work, or enjoying leisure pursuits.

But a key goal is also getting by without being short of money, which appears less achievable for many.


Insufficient super

The reality is that, although there has been a slight rise in overall optimism about super sufficiency over the past three years, this positive outlook is mainly prominent among younger generations.

Baby Boomers are the most concerned about having adequate superannuation for their retirement.

They’re nearly twice as likely as Gen Yers to predict they’ll run out of money.

And their overall confidence has fallen according to the survey.

This failure to save is a financial time bomb waiting to explode, particularly when coupled with the high numbers of Australians expecting to retire with a mortgage.

RaboBank found that a quarter of Australians (24%) don’t expect to have paid off their home by the time they leave the workforce.

The burden of home loans

Some intend to use superannuation or downsize other investments to pay off a mortgage.

Others are planning to delay their retirement to repay.

But of course the Australian Government already plans to raise the retirement age for the standard pension to the age of 70 by 2035.


There has also been a huge increase in Baby Boomers planning to use superannuation to pay off their mortgage and an associated drop in those planning to downsize.

Escalating property prices may be to blame for this, with retirement units becoming increasingly unaffordable.

Concern about retiring with a mortgage has also been rising over the past three years, though mainly among the younger generations.

More taking responsibility

One positive point is that most Australians – across all age groups – believe it’s their primary responsibility to ensure they have a financially comfortable retirement.

Overall, only one quarter think they should rely on the Government.pay gap equality money super saving save retire salary men vs women woman man career work

Women worse off

Women are in a far worse situation than men when it comes to their superannuation with less than half the savings of men.

Australians approaching retirement age are probably more realistic about the size of fund they’ll need compared to younger Australians.

But while they have more in their super – since they have worked for longer – they’re expecting to only have about half the amount they need: $455,461 rather than $886,152.

Right now, the average Baby Boomer only has $257,664 in the pot. If poor health or job loss strikes, those without a plan B such as income insurance are going to be in dire straits.

Searching for solutions

So what can older Australians do to try and top up their retirement funds?

Some are already making voluntary super contributions, either via salary sacrifice or after-tax contributions.

But here’s a terrifying fact: most of those topping up are those who already believe their super will be sufficient.

Only 17 per cent of Australians – of all ages – who believe their super will run out are making voluntary contributions.


My thoughts:

Clearly superannuation isn’t going to be enough for most Australians, and it seems like the Government is not going to be able to fund the type of lifestyle that most Australians want in retirement (nor should they have to!)

That’s why more baby Boomers should use the equity in their homes to invest in residential real estate, rather than just trying to pay off their home loans.

The trouble is most don’t even know where to start, how to do it or how many properties they’ll need. Others are scared as they heard all sorts of myths about property investing.

Of course while property investing may be simple it’s not easy. 

And that’s not a play on words.

Fact is, around 20% of those who get involved in property investment sell up in the first year and close to half sell their property in the first 5 years.

And of those investors who stay in property, about 90% never get past their second property.

So if you want financial freedom from property investment to fund your dreams, you’re going to have to do something different to what most property investors are doing.

You’re going to have to listen to different people to who most Australian property investors listen.

You’re going to need to set yourself some goals and follow a strategy that’s known, proven and trusted.

Then you grow your property investment businesses one property at a time.

Of course…you need to buy the right type of properties.

One that has a level of scarcity, meaning they will be in continuous strong demand by owner occupiers (to keep pushing up the value) and tenants (to help subsidise your mortgage); in the right location (one that has outperformed the long term averages), at the right time in the property cycle (that would be now in many states) and for the right price.

To become a successful investor you will need to surround yourself with a team of independent and unbiased professional advisors (not sales people) – a team of people who are known, proven and trusted, so it is probably appropriate to remind you that in changing times like we are experiencing, no one can help you quite like the independent property investment strategists at Metropole.

property investment boom

Remember the multi award winning team at Metropole have no properties to sell, so their advice is independent and unbiased.

If you’re looking for independent property investment advice to help you become financially independent, including how to get he banks to say yes more often to you, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team of property investment strategists at Metropole have no properties on the market to sell, so their advice is unbiased.

Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.

Please click here to organise a time for a chat. Or call us on 1300 20 30 30.

When you attend our offices in Melbourne, Sydney or Brisbane you will receive a free copy of my latest 2 x DVD program Building Wealth through Property Investment in the new Economy valued at $49.


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Michael Yardney


Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au

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