3 in 10 Australians nearing retirement fail to plan

Around two-thirds wanted lifetime income and inflation-linked retirement features.

A third of Australians approaching retirement have taken no action to prepare for life after work, despite most being actively engaged with their finances.

According to Australian life insurance specialist, TAL, a study found that 33% of pre-retirees have not started planning for retirement, whilst 20% do not know what they will do with their superannuation. 

This comes even though two-thirds describe themselves as engaged or highly engaged with their financial affairs.

The survey of 2,000 Australians aged 55 and above found growing demand for financial certainty in retirement. 

Around two-thirds of pre-retirees identified a guaranteed lifetime income and income that keeps pace with inflation as the most important features of a retirement product.

Shaun Bransdon, general manager of retirement and wealth at TAL, said the findings highlight a gap between financial awareness and retirement planning. The research also found that cost-of-living pressures are affecting retirement preparations. 

Only 29% of pre-retirees said they have money left over for regular saving or investing, whilst almost half expect their spending power to decline in retirement.

The proportion of pre-retirees planning to work beyond the age of 70 rose to 36%, up from 27% in 2024.

Although 33% of pre-retirees expect their retirement to last more than 20 years, almost half believe their superannuation savings will run out before then.

Amongst current retirees, 48% said they had taken no meaningful action to prepare for retirement, compared with 39% in 2024.
Of those who did plan, only one-quarter started before turning 50, whilst more than one-third delayed planning until their 60s or later.

The study found retirement often occurs earlier than expected. Around 61% of retirees left the workforce before the age of 65, compared with only 15% of pre-retirees who expect to retire before that age.

Bransdon said leaving the workforce earlier than planned can significantly affect retirement savings, particularly if workers miss several years of superannuation contributions during their highest-earning years.

The research also found retirement satisfaction varied depending on how retirees managed their superannuation. 

About 90% of retirees who chose pension accounts or lifetime income products said they were satisfied with their decision. This compared with 81% of those who left their super in accumulation accounts and 66% of those who withdrew lump sums.

However, only 38% of pre-retirees said they were familiar with how retirement income products work. 

At the same time, 87% said they would like to learn more if their super fund offered a lifetime income product. 

Amongst existing retirees, 66% said they would have been interested if such products had been clearly offered when they retired.

The study also found that one in five retirees in their 80s wished they had spent more during the early years of retirement. 

If faced with running out of money, 40% said they would reduce spending, whilst 34% would rely on the Age Pension.

According to TAL, the findings point to an opportunity for superannuation funds to provide more guidance and retirement income solutions as Australians seek greater certainty about their financial future in retirement.