Summary
Four factors to help you feel confident about retirement
Feeling confident in your retirement isn’t just about your super balance alone, you also might want to consider things like how you’ll adjust to your new lifestyle and how you’ll care for your health and wellbeing. We’ve been in partnership with Monash University on the Retirement Confidence Index (RCI) that examines how people think, feel and plan for life when they finish working.
The RCI considered 4 factors of retirement confidence include:
- financial awareness and skills
- retirement awareness and planning
- health and wellbeing, and
- social connectedness.
Source: Achieving Confidence in Retirement | AustralianSuper
The Retirement Confidence Index: in detail
What makes you confident about approaching retirement? What are your financial resources? Your financial knowledge? How connected you feel with family and friends? How healthy you are? The reality is they are all crucial factors in living confidently in retirement and your road there. The Retirement Confidence Index (RCI)1, a study from AustralianSuper and Monash University, is the first of its kind. It examines how people think, feel and plan for life when they finish working.
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The RCI considered 4 factors of retirement confidence:
- financial awareness and skills
- retirement awareness and planning
- health and wellbeing, and
- social connectedness.
Financial awareness and skills
This refers to a person’s level of financial literacy, attitude, behaviour, control and financial anxiety.
The survey found financial literacy was linked to cognitive ability, higher income, home ownership, having more assets than debts, and being financially risk averse.
The study found that women don’t feel as confident about their level of financial literacy as men. A trend that has continued throughout the study. When it came to confidence in financial literacy, women scored 57 out of 100, compared to 72 for men. This gap is significant, and it has continued to widen since 2017. However, women exhibit a stronger ability to save and budget than men, which can result in a better retirement. Feeling in control of your finances and understanding your super savings are an important element of retirement confidence.
Retirement awareness and planning
This looks at how certain a person feels about the future, and their behaviour in terms of setting goals.
Participants who set clear and specific goals scored much higher than those who didn’t."Respondents with excellent physical health
had a higher level of retirement confidence
than those with poor health."Migrants were less likely to plan for retirement, however, they had similar levels of financial literacy and mental and physical health as people born in Australia – and a similar overall level of confidence.
Health and wellbeing
This measures the importance of physical and mental health.
When asked how confident they felt about retirement, respondents with excellent physical health had a higher level of retirement confidence than those with poor health.
Overall, women fared better than men in mental health. Being married or in a de facto relationship, having dependent children, owning your own home, and having a university degree also correlates with more positive mental health.
Social Connectedness
This examines the impact of social connections.
The survey found women and those who were married or in a de facto relationship were more socially connected. The survey also found migrants were more likely to be missing quality connections.
Retirement is what you work for - Greg’s story
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Show transcript
Member: Greg Hayter
Retirement's what you work for. It's what you work for your whole life to finish up and enjoy the things in life that you wanted to do. That's why you work.
I'm Greg. I'm a fitter and turner. I've worked for the steel industry in Newcastle for 46 years and I've recently started long service leave. That will finish up when I'm 61 and then I'm going to retire. I've been with AustralianSuper for 25 years.
I don't think I'll miss the physical work, probably just going to work and being with mates and having a yak and yarn. Our goal is to travel as much as possible and I'm looking forward to going down the beach every day. I love the beach. Just the simple things, really. I think loneliness in retirement is a big issue. One of the key factors is having the purpose of what you want to do, where you want to go, what you need. And I think you don't have to have lavish plans to have a purpose.
AustralianSuper Education Manager: Jaclyn Livingstone
AustralianSuper has conducted a national study called the Retirement Confidence Index, and we've been doing this since 2017. AustralianSuper has been partnering with Monash University and the study explores what makes people confident as they're approaching retirement, as well as when they're in retirement.
So there's four key factors that influence retirement confidence. The first one is financial awareness and skills. There's social connections, your physical and mental health, as well as your ability to plan for the future and set goals.
Some people might be really strong in some areas, but then they might need to spend a bit more attention on some other areas. The Retirement Confidence Index shows that you need to balance the four key areas in order to be confident in your retirement.
Member: Greg Hayter
You work towards finishing up. I thought I'd be terrified, but I haven't missed a day yet. I just love it. It's been great!
End transcript
The Retirement Confidence Index: by the numbers
Heading towards retirement and wondering what factors you might need to consider?
The Retirement Confidence Index can help. It’s a research project we undertook with Monash University every year between 2017 and 2022 to see how Australians over 50 are feeling about retirement. Since 2017 we’ve surveyed more than 8,000 people, aiming to educate Australians and improve their retirement outcomes.
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Here are some of the key findings.
66 out of 100 - the current Retirement Confidence Score
66 out of 100 - the current Retirement Confidence Score
This is the overall feeling of confidence our survey participants have when thinking about retirement. It reflects how confident people 50 and over are feeling about retirement. The number has gradually increased over the past five years to 2022 for both men and women, from 63 points in 2018. Retirees also reported a higher confidence level of 67 points than pre-retirees, with 63 points.
More than two-thirds regret not planning sooner
More than two-thirds regret not planning sooner
These participants, aged 50-69, said they wished they’d started to think about their financial needs for retirement in their 40s. While retirement can feel far off for many people, the truth is, it’s never too early or late to start thinking about it. And if you need any extra help, AustralianSuper members have access to a range of options to help members find the advice4 that suits them.
70.5 points out of 100 - the level of social connectedness
70.5 points out of 100 - the level of social connectedness
We found that maintaining an active social life can directly affect retirement confidence. Social connectedness is based on the quality and amount of connections a person has in their social circle of family, friends and peers.
The 2022 results found that women and those who were married or in a de facto relationship were more socially connected.
57 - the financial literacy confidence score for women, compared to 72 for men
57 - the financial literacy confidence score for women, compared to 72 for men
In 2022, Australian women continued to be less confident about retirement than men, even though the report shows they have better budgeting and savings habits. Women with dependents were more anxious about their retirement plans, and those aged under 60 said they should have started planning earlier.
65 - the average age people plan to retire; 56- the average age people actually retire
65 - the average age people plan to retire; 56- the average age people actually retire
On average, Australians retire almost 10 years earlier than they expected3. Unexpected circumstances such as redundancy, ill health, being unable to find work, or having to care for a loved one are all reasons retirement can come sooner than planned.
While not being able to choose when you retire is common, it can have a big impact on your financial situation. That’s why it’s important to know your finances and plan ahead – it’s never too early to make plans for when you finish working.
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Important Information
- The 2022 AustralianSuper Monash University Retirement Confidence Index. Based on answers from approximately 3,000 people aged 50 and over. Retirement scores are compared to the Australian average, estimated from the key socio-demographic variables captured in the study
- Australian Bureau of Statistics (2020-21), Retirement and Retirement Intentions, Australia, ABS Website.
- Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Some personal advice may attract a fee, which would be outlined before any work is completed and is subject to your agreement. With your approval, the fee for advice relating to your AustralianSuper account may be deducted from your AustralianSuper account subject to eligibility criteria.