Are We Going To Need Over $1M In Savings To Retire Comfortably?

Women Love Tech
on 18 September 2018

When Apple announced their new phones last week, the internet collectively groaned at the staggering prices of both the iPhone XS and the iPhone XS Max. Surely, you’ve seen the memes mocking the prices, suggesting buying the new phones would mean selling a kidney. But most people still want to go ahead and buy them anyway. An interesting bit of research (which compared iPhone XS 64GB prices in various countries to the official statistical data about average wages in those countries) found that it would take 8.6 days for an average Australian to earn enough to buy the new iPhone XS. MaxING’s newest research puts all of the above in good perspective, by revealing the differences in Australians’ attitudes towards retirement. On average, Gens X, Y and Z think they’ll need between $1.5m and $1.74m each in savings (excluding assets) to retire. Well, no wonder, since we’re all busy spending our money on $1500+ phones!

Key findings from ING’s research include the following:

  • Gen X don’t think they’ll be financially ready to retire by the time they’re 72 years old, despite wanting to retire at age 63.
  • Gen Y would like to retire at age 61, but don’t think they’ll have the funds to do so till age 68.
  • Gen Z are more optimistic, wanting to retire at age 62 and being ready at 65.

The fact that people from Gens X, Y and Z think they’ll need between $1.5m and $1.74m each in savings (excluding assets) to retire, is really interesting because this is more than double the ASFA recommendation for a standard couple that own their home.

Less than half of Gen X say making a plan for retirement is something that’s on their radar, while 64% of Gen Y and 79% of Gen Z admit to not having a retirement plan on their “to do” list. Guilty as charged!

Melanie Evans, ING’s head of retail banking says, “Gens X, Y and Z are clearly thinking cautiously about retirement and are under no illusion that you can retire whenever you want without adequate savings. However, there seems to be a reluctance to make plans, and this could be because they’re just not sure where they can go for help.”

The research also found 35% of Gens X, Y and Z that are concerned about not having enough to retire just don’t know where to start; astoundingly, some 25% are choosing to “stick their heads in the sand and hope for the best!”

The research shows that on average, Aussies generally become serious about planning for their retirement at age 45.

  • According to all three generations, having enough money to live comfortably and not having to worry about a mortgage or rent are the two top things that will make for a happy retirement.
  • Also high on the list – regular holidays and being able go out for a nice meal whenever you want.
  • In a shout out to flexible working, more than 45% of respondents said that being able to work casually, when it suits them, would make them happy. This was particularly the case for Gen Z with more than 60% of respondents echoing this sentiment.

“For Aussies it’s the simple things that will make us happy in retirement – having enough money to live well and home security. We’re also a nation that’s not prepared to completely stop work with many choosing to continue some sort of casual work throughout retirement.”

Other interesting(ly amusing) findings include:

  • Baby boomers are the most likely generation to spend their kids’ inheritance, with over 41% of all baby boomer respondents saying they plan to spend it!
  • 28% of Gen X, 31% of Gen Y, and 14% of Gen Z say the same.

This research was conducted in July 2018 by Rice Warner with more than 2000 participants aged 16 to 64. Respondents were asked to select a range of savings they require for retirement. The midpoint of each range was subsequently utilised to derive the average savings required for each generation.

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