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Sobering stats about baby boomers' retirement savings

Tags Retirement Planning Retirement Savings
Category Retire

An image of two worry free retirees

A recent survey of the savings and debt habits of Australians has revealed that many Baby Boomers are facing precarious times, with a third of this generation entering retirement with a mortgage hangover.

RaboDirect’s 2012 National Savings and Debt Barometer reveals that Baby Boomers are feeling the pinch and are the most pessimistic of all the generations about the economic outlook of the nation. It shows that almost half (40 per cent) of Baby Boomers who expect to retire with a mortgage are planning to sell their property in order to pay it off. At the same time, nearly a third of Boomers (30 per cent) intend to use their superannuation to pay off their mortgage a plan that RaboDirect says is risky, particularly as a number of pre-retirees have recently seen the value of their super portfolios suffer.

Renee Amor, RaboDirect Australia spokesperson said:

The RaboDirect National Savings and Debt survey findings about Boomers are not all bad. However, it has highlighted that because we are living longer than previous generations, we need larger nest eggs to maintain our living standards. Everything that can be done to bolster savings and secure a reasonable retirement income is a step in the right direction.

“For Boomers who are nervous that they will be facing tough times, there is a way to get the course of their savings plan back on track. It may sound basic, having a formal budget is one quick and easy way to start being in control of your finances. Another is to take a look at your investment and savings products and make sure you have the most suitable ones for your situation. A true savings account, for example, should have an ongoing and decent interest rate. Leaving your hard earned cash in low interest accounts is tantamount to throwing money away.

One of the best ways to help eradicate debt and ensure that you are making the most of your money is to consult a professional. And the sooner you start, the better.”

Key points:

  • 30 per cent of Boomers expect to retire with a mortgage
  • Just over 40 per cent of those expecting to retire with a mortgage, plan to sell their property pay off the mortgage and buy a cheaper property
  • Meanwhile, some Boomers also plan to pay off their mortgage with their superannuation (just under 30%)
  • Boomers are feeling the pinch and the pressure and are the generation most likely to say that they are feeling worse off and are most pessimistic of all the generations about where the economy is heading
  • 39% expect to be worse off in 12 months
  • 47% believe they have less money to live on each week
  • 62% expect economy to be worse in 12 months
  • Baby Boomers expect to retire with $400,000 in superannuation which is half the amount they think they need. They currently have $200,000 in funds
  • Even if Baby Boomers doubled their super balance between now and retirement, they acknowledge that it will only give them around 50% of what they need
  • There are some positives however to come out of the 2012 National Savings and Debt Barometer for Baby Boomers:
  • Baby Boomers feel more in control of debt and are less stressed about money management
  • Almost 70 per cent of those Boomers who say they have less money to live on admitted to bargain hunting as a result
  • Boomers are more likely to download a weather app than a banking app – if Boomers payed as much attention to the stormy or otherwise state of their finances, and downloaded tools to help them save more, spend less, budget better etc. they could find they improve their financial situation.

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