Twenty-three per cent of Aussies delay retirement due to Covid-19, says Colonial First State
The Australian Prudential Regulation Authority (APRA) has estimated that a whopping $30 billion has been taken from superannuation accounts as a result of the Covid-19 pandemic.
Whether Aussies are choosing to do this willing or because of little choice, it’s not painting a pretty picture for retirement.
New research from Colonial First State has revealed that 23% of Aussies between the age of 30-65 believe they will have to delay retirement and work longer due to the pandemic.
Almost half (45%) of respondents also confessed to either feeling scared or not financially confident about retiring.
“The Coronavirus pandemic has significantly changed the world, not only socially but financially too. These are extremely challenging times for many people,” said Colonial First State’s general manager, Kelly Power.
Women falling behind with preparing for the future
Some of the more concerning figures from the research was around women and how they fared regarding their financial future.
A third of women (33%) said they do not feel confident about retirement compared to men (25%), as they felt unable to save during the pandemic, despite being more willing to cut back on spending.
But according to Power, this financial inequality began long before Covid-19 hit Aussie shores.
“The gender gap in the Australian superannuation system is a real issue that sees women financially disadvantaged in retirement. It was an issue before the current crisis, and it will be an even bigger problem when we emerge from the recession,” she said.
Only a third of women also reported not having an investment portfolio outside of their superannuation, compared to only 17% of men.
“As an industry this is something that is concerning for us and we need to do everything we can to support women impacted by Coronavirus, help them protect their wealth, and rebuild as the economy recovers.”
How Aussies can get a better grip on their super
According to Colonial First State, 42% of Aussies regularly check their super balance, with an additional 16% now checking their balance more frequently since the pandemic began.
“It’s encouraging to see that Australians recognise the importance of super as a savings vehicle for retirement and are showing higher levels of engagement,” said Power.
“We want more Australians to engage with their super and take positive action to make their personal retirement goals come true.”
Some of Power’s tips to getting on top of super include:
- Understand your number - Before you can take control over your super balance, the first step is to have an understanding of how much you’ll need to live a comfortable life in retirement. You can do this by using online calculators, like the MoneySmart retirement planner calculator.
- Keep your balance topped up - While your employer is required to contribute 9.5% of your earnings toward your super, if you are in a financial position to do so, making your own contributions could make the world of difference. For instance, Colonial First State estimates that a 30-year old salary sacrificing $10 a week of their before-tax income could save an additional $25,404.
- Know your eligibility for government support - If your financial situation has changed due to the Covid-19 pandemic, find out whether you are eligible for the low income super tax offset (LISTO). LISTO is a government super payment which helps low income earners boost their retirement savings by refunding (up to $500 per year) the tax you’ve paid on your before-tax contributions. If your financial situation has changed due to the Covid-19 pandemic, find out whether you are eligible for the low income super tax offset (LISTO). LISTO is a government super payment which helps low income earners boost their retirement savings by refunding (up to $500 per year) the tax you’ve paid on your before-tax contributions.
Another way Aussies can boost their savings during Covid-19 is to make the switch to a high interest savings account. You can compare more than 200 savings accounts by using our comparison tool.