The Australian Seniors Series: The Super Savvy Report 2023

The Australian Seniors Series: The Super Savvy Report 2023 The Super Savvy Report 2022 forms part of the Australian Seniors Series and explores the subject matters most important to our senior community.

There’s no doubt that super plays a pivotal role in our financial plan. After all, the higher your super balance, the more money you could have for retirement. However, it’s clear that the rising cost of living and the threat of a recession are front of mind for many and will leave some of us better financially prepared than others.

The Super Savvy Report 2023 forms part of the Australian Seniors Series and explores the subject matters most important to our senior community. Surveying 5,016 Australians over 50, this in-depth study explores how we’re looking to tackle super savings and the impacts of economic downturn.

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Choosing a super fund

Since super is the backbone of our future savings and possibly one of the most important financial considerations ahead of retirement, it’s no surprise that the three most frequently cited features which are extremely important when choosing a super provider are trustworthiness (85%), returns (79%) and fees (75%).

Keeping track of your super balance is important for retirement. Although many of us can check our super balance online, some of us (38%) believe that super funds could improve on keeping their customers informed of current market conditions and what they’re doing about them, allowing them to forecast with more accuracy.

Interestingly, men check their super returns more frequently than women. More than half (53%) of male respondents claim to check their balance monthly, while nearly 2 in 3 (59%) female respondents said they check their returns quarterly or less.

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The rising cost of living

As the cost of living and market uncertainty continue to rise, it’s no wonder less than 2 in 10 (15%) pre-retirees expect their lifestyle in retirement to be an improvement on their current lifestyle. 

To regain control of our financial independence, many of us are making or considering changes to our everyday life to get by as we brace for the rising cost of living. From cutting down on everyday expenses (73%), picking up extra work (18%), creating additional sources of income (10%), and even pushing out retirement (18%), it’s clear our ageing community is concerned about staying afloat.

Women (84%) are more likely to be concerned than men (75%) about a major recession and market downturn impacting their super savings. Further, a higher proportion of men (88%) reported feeling a strong or reasonable understanding of the impact of a recession and market downturn on their super and retirement preparedness than women (75%). Men (86%) also stated in a higher proportion that they feel they understand their retirement savings product compared to women (72%).

There’s no doubt that relationships are a two-way street, and sometimes we make sacrifices to support each other. However, financial sacrifices can create a monetary imbalance, with some women now having greater financial concerns and less financial confidence than men.

Moreover, a much higher proportion of men (25%) reported having a strong understanding of their retirement savings product compared to women (12%). 

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Gender pay gap extends to super

Unfortunately, the gender pay gap shows no sign of slowing down, with the new study reporting that even more of us feel there’s a gap in super balances today compared to the Super Insights 2019 report (83% vs. 85%).

Most of us agree that the top reason for the gender divide in super balances is career punctuation (76%), followed by women working in lower paying industries (59%), and the gender pay gap (55%).

To tackle the undeniable presence of a pay gap in Australia, close to 3 in 10 (28%) of respondents who are living with a partner/married have taken steps to close the gap. The top reported strategies include making additional contributions (74%) and splitting contributions with our partners (23%).

As we age, we must take steps to safeguard our retirement plans to ensure we’re set up comfortably when we decide to leave the workforce. During this transitional period, we want our super savings to move seamlessly from saving for retirement, to turning our savings into our retirement income without incurring capital gains tax (91%).

The above information has been sourced from The Australian Seniors Super Savvy Report 2023, available on the Australian Seniors Website.

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Dawn Thomas, Senior Financial Adviser at The Wealth Designers, shares her top tips for achieving a healthy super plan and improving your financial security at retirement: If you’re unfamiliar with your super balance and contributions, the below actions can provide a good place to start.

However, please remember that the ideas and information below don’t take your personal circumstances into account, and seeking advice before making any decisions is important. This is not a guide – this is just a starting point to get you thinking about what could be beneficial for you.

  1. Understand what you want for the next 30 to 40 years: Do you want to have a change of a home or car? How will you travel? How will you spend your time in retirement? What aged care setup do you foresee for yourself and your partner?  If you’ll need to provide for large capital expenses like renovations and covering wedding costs for the kids, this will need to be factored in when calculating how much you’ll need in retirement.
  2. Know your budget: An initial step in designing strong financial strategy is to understand what comes in and out of your household. There are various budget programs and spreadsheets available to help you calculate this. 
  3. Work out your retirement budget: For future retirement budgets you could consult documents like the ASFA Retirement Standard to get a sense of average retirement figures and work in your special requirements such as travel. This can help you work out or “reverse engineer” how much capital you need in super to generate this. You should be able to input these figures into the retirement tools provided by your super provider. 
  4. Read your super statement: Your statement can tell you a lot about your setup. Are your beneficiary nominations up to date? Do you have too much insurance in super? Is your employer making the right payments into super? How have you been invested and what’s the return?
  5. Make a super date: Planning for your future requires presence and time, make a date out of it so both members are across the financial strategies. If you’re single, make a date with yourself to understand what you have in your set up.
  6. Don’t relinquish your role in making financial decisions: Everyone relates to learning about money differently, so don’t accept that you ‘don’t get it’. There are plenty of videos, articles, books and podcasts available to help improve your financial literacy in different ways such as “Ladies Talk Money”, “The Grass is Greener”, “Good for the Bee”, “Good Money Habits”, “Centsibility”, “Wonder Woman’s Guide to Money”, “Don’t Panic”, “The Money Sandwich” and “The Joy of Money”. 
  7. Boost your super: Super is a low tax vehicle for retirement purposes. If you’re growing funds to fund your lifestyle from 60 onwards, super is often a suitable setup. There are multiple ways to contribute into super whether they’re tax-deductible, tax-free, from an individual, or contributed via a spouse. Currently, the cap for tax-free pension phase is $1.7 million per person.
  8. Be realistic about what to leave the children: Often retirees don’t see their home as an asset they can draw from during retirement as they feel they’d like to leave this to the kids. If it’s going to put more financial stress on you to allocate funds to your children, revisit what the realistic amounts could be.
  9. Review your estate plan: Ensure that your wishes are followed if you pass away or become incapacitated. 
  10. See a financial adviser: A financial adviser can help you devise strategies that help you achieve the outcomes you desire. A good financial process is where you feel you can collaborate with your adviser and feel safe enough to ask any questions to help you feel empowered in your financial decisions.

This article is provided for general information purposes only, does not consider your objectives, financial situation or needs and shouldn’t be considered or relied upon as professional or personal advice. If you have legal, tax, or financial questions, you should contact an appropriate professional.