Australians are failing to prepare adequately for retirement and many are unlikely to have enough savings to enjoy the lifestyle they expect, a report to be issued today says.
The AMP/NATSEM report, prepared by the University of Canberra's National Centre for Social and Economic Modelling, found many Australians would run out of retirement savings within three to four years of retiring, with women more likely to have inadequate savings.
The report, Don't Stop Talking about Tomorrow, found that the superannuation guarantee rate of 9 per cent was no longer enough to provide for a comfortable retirement for most workers.
A separate report issued yesterday by ratings agency Super Ratings also warned the stellar recovery of recent months by super funds might have hit a speed bump, with balanced funds recording their first negative return in eight months. About 80 per cent of Australians keep their superannuation savings in balanced funds.
NATSEM report author Associate Professor Simon Kelly said increasing the superannuation guarantee rate to 12 per cent would go a long way to reducing the number of retirees dependent on the age pension.
''That 9 per cent figure is based on a working life of 35 to 40 years. That's not realistic for the future and never has been realistic for women [due to caring for children],'' Dr Kelly said.
On average, women were likely to have only 60 per cent of the personal savings of men and only half the amount of superannuation. ''Baby boomer women are particularly behind their male counterparts,'' Dr Kelly said. ''Men aged 55 to 64 have on average $130,900 in superannuation, while women of the same age have less than half that amount, an average of $60,700.''
In order to enjoy a comfortable retirement a worker needed an estimated 65 per cent of their pre-retirement income, which, based on average national earnings, would equal about $40,475 a year. Based on those figures, most people who retired at 65 would run out of savings before they reached their 70s.
AMP financial services managing director Craig Meller said Australians' expectations of a comfortable retirement were not matched by their savings.
''As a nation we need to promote discussion with policy-makers and industry to explore ways to achieve adequate retirement funding for all. By increasing the superannuation guarantee to 12 per cent, the average superannuation balance could increase by one quarter.''
The report also found that increasing the rate to 12 per cent would reduce the costs to government of the age pension by 2.3 per cent.
The gap in retirement savings was being compounded by retirees living longer and working part-time. Nearly a third of Australians work part-time, compared with 10 per cent in 1966. In 2009, 2.3 million Australians, or 77 per cent of those over 65, were on the age pension.
Council on the Ageing ACT executive director Paul Flint said increasing the superannuation guarantee to 12 per cent might help boost savings, but governments still needed to ensure the age pension kept pace with the cost of living.
''Traditionally 50 per cent of life savings for retirement comes in the last 15 years of work so having a flat increased rate over an entire career may not be the best way to go.''
According to Super Ratings, the recovery in superannuation returns was owed to Australian shares, but strength in the dollar and continued sharemarket volatility were likely to ensure a bumpy ride for some time.
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