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Two monumental signposts for retirees and pre-retirees this week
More retirees than ever, retiring older than ever but the cost of living in retirement is finally not rising as fast.
We all know deep down that retirement is changing quickly, being shaped by a new and aspirational generation - you - into what they want it to become. And this week there was two pieces of data out that light the way for those retiring anytime soon: new data on the age people are retiring at in Australia right now, and an increase to the amount you need to retire in comfort. So today, dive deeper with me.
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In this newsletter:
Article: Two monumental signposts for retirees and pre-retirees this week
Personal note: From Bec’s Desk
Sydney Morning Herald/The Age Article: Five ways to check if your super fund is retirement-friendly
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People in Australia are retiring older and still depend significantly on the age pension
Let’s talk about the retirement age and retirement intentions of Aussies first. This week the Australian Bureau of Statistics (ABS) released their latest insights into the retirement intentions of people aged 45+ in Australia. And there was some really interesting (and relatable) statistics that show that Aussies are clearly retiring older, that women are going first. It also shows that today’s retirees are still critically dependent on the age pension - which is nothing to be embarrassed about. And finally, the report showed without a doubt that the number of retirees is only going to get bigger in this country. So you certainly won’t be alone out there as you chase your epic retirement, juggling income from both the pension and superannuation.
In the 2020/21 year, we saw 300,000 new people had retired since the last census, which was held in 2018/19. And 140,000 people actually retired in the 2020/21 year. The average age of retirement in Australia in 2020/21 was 64.3 years, the same as it was in 2019 and the highest it has ever been. For men, the average age was 65.4 years and for women the average was 63.7 years.
People who have not yet retired are intending to retire at 65.5 years, with the majority of men looking to retire at 66, and women at 64.9 years. A lot of media is reporting the metric that the average retirement age has gone up Interestingly, 670,000 people intend to retire in the next 5 years, with more than 220,000 in the next 2 years, if not more according to the annual statistics.
There is now 4.1 million retirees in this country, up from 3.8 million people in 2018/19, when the last data was collected. 56% of the new retirees were women, driving our population of female retirees to 2.3 million, higher than men at 1.8 million.
When asked, there were three big reasons people retired in 2020/21. 28% retired because they had reached retirement age or become eligible for superannuation, 13% retired because of sickness, injury or disability and 7% were retrenched, dismissed or found no work was available. Retired women reported leaving their final jobs more often than men in the workforce to care for a disabled or elderly person, with 4% of women doing so, compared to 2% of men.
In financial insights, the aged pension remained the main source of income amongst retirees in Australia in 2020/21, with nearly 50% of people relying on it as a main source of income. Superannuation has grown as a source of income, with men reporting a greater increase in the use of superannuation than women. And, in not so surprising information, 34% of retired women relied on their partner’s income to meet their costs of living in retirement. We still have a big job to do in this country to equalise the balance on superannuation.
Glaringly, the largest influencing factor for people considering when to retire was ‘financial security”. No surprises there, and an important reason for us to see the superannuation guarantee rise to 12% in 2025 and for the retirement income covenant to urge superannuation funds to help people understand their superannuation better as they approach and enter retirement.
Finally, retirement has a couple of boom years ahead in Australia, with nearly 160,000 people expecting to retire in 2023, and 180,000 people in 2024, potentially. So if you’re thinking about retiring, you should be able to find others in the same boat.
The speed of inflation for retirees is slowing, up just 0.5% for the quarter, but the cost of living is still rising
This week also gave us new data on the rising cost of living for retirees. This number has been rising over the last year at a faster rate than the rest of the population, but data out this week from Association of Superannuation Funds Australia (ASFA) for the June quarter shows that finally, inflation is moderating, with the cost of living up just 0.5%. Yes, this increase means it now costs more to have a comfortable retirement. ASFA projects that retirees planning to have a comfortable retirement need to budget $70,806 per year for couples, and $50,207 for singles. These are up from $70,482 per year for couples, and $50,004 for singles in the March quarter.
This update and decrease to the speed of inflation, brings the annual inflation rate for retirees’ cost of living down from 7.7% to 6.1% for the rolling year, which is just slightly higher than the 6.0 per cent level for the general Consumer Price Index (CPI).
The biggest hits to retirees’ hip pockets in this quarter are coming from insurance where there has been an increase of 5.3% reported across house, house contents and motor vehicle insurance, and this comes on top of a 3.5% increase in the March quarter. The cost of fruit and vegetables continued to rise this quarter, up close to 4%, chiefly because of the weather effects on potato, cucumber and tomato prices. The price of bread increased more than 5 per cent and is up 14 per cent over the year too.
All in all, it was a week of interesting insights into modern retirement, the age we are actually retiring in Australia right now, and the amount of money we need to live a comfortable retirement. Do you watch these numbers? Leave a comment with your thoughts on the article here.
From Bec’s Desk this week
I just want to take a moment to say thank-you. I’ve been passionate about retirement for more than ten years now, and it feels like it’s all coming to a head, with the book really catching on, and the new podcast nearly ready to launch. I’m excited, truly excited about how the six pillars of an epic retirement can help people navigate the tricky phases of pre-retirement and early retirement where things feel so confusing. And it looks like you’ve noticed too.
How to Have an Epic Retirement has been in book stores for five weeks now, and we can now celebrate two exciting positions in the charts that I only dreamed of:
It is the #1 bestselling self improvement book by an Australian author for 4 weeks in a row! This is based on actual book sales data!
AND, possibly even more exciting, it is now #4 on Booktopia’s National Bestseller List, across all categories! They’re Australia’s largest online bookseller so we’re pretty chuffed with that.
It’s sold out again online at Amazon and Booktopia, awaiting the first reprint which will arrive in the warehouse in less than a week (get in first to get the next round of stock). You can still buy copies in all major bookstores and book sellers. Big W and Target have some stock in stores and Dymocks still have some available online at the time of writing. The reality is, the sooner you buy it, the sooner you’ll know what all the fuss is about, I hope.
I’ve been hard at work on our all new podcast, which I’ll launch to you with a bang very soon. Look out for the announcements. I have lots of wonderful help with this one - and it’s good! Even if I do say so myself. 😁
If I haven’t said it enough - thank-you! thank-you! thank-you for getting in there and taking all this information on board - and finding ways to make your retirement better! Make it epic!
Got a comment to leave on the stories or the newsletter - pop on over to the site and leave it for me. Don’t forget to ❤️ the post while you are there!
Bec Wilson Xx
This article appeared in the Sydney Morning Herald, The Age, Brisbane Times and WA Today on Sunday 27th August 2023, in both print and digital.
Five ways to check if your super fund is retirement-friendly
As we explore the idea of retirement, for many, it’s the first time they have really become familiar with their superannuation fund’s services, and what they offer to help you navigate this huge step in life.
Pre-retirement is the time that many people might start to think about what they want from a super fund as they arrive at the retirement stage and start assessing whether their fund is committed to looking after their customers and helping them navigate this stage of life.
The goal of a superannuation fund in the retirement phase is to generate strong investment returns and structure its products to pay members an income they can rely on to live out their whole life. They also have an important role to play as your primary source of information about how to use that money you’ve saved for decades.
So today, let’s look at the five things I would evaluate in a superannuation fund to understand if it is really retirement-friendly.
Order your copy now - buy the paperback, audiobook or ebook
If you haven’t ordered your copy of How to Have an Epic Retirement already, here’s how you can.
It is the ultimate guidebook for modern retirees.
How to Have an Epic Retirement guides readers through the way the systems of retirement work, and is packed with tips, insights and guidance that spans six pillars of an epic retirement. It is designed to help you learn the valuable lessons that modern retirees wish someone had shared with them before they kicked off the changes and stages of life that come after retirement.
How to Have an Epic Retirement is on the Hot Picks for Fathers’ Day list for Booktopia. You can buy it 30% off here.
You can also get it on Amazon and Audible here.
Or, you should find it wherever books are sold - see the stockists here.
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