The first wave of baby boomers, and we have 5.5 million of them in Australia, turned 65 two years ago, with thousands hitting retirement age each week.
But they’ve burned through their cash during their working lives and are left with mortgages as they leave work, or as work leaves them.
Money management isn’t a strong point with many expecting they will have less than half the superannuation they need at retirement.
And many don’t even know what the interest rate is on their mortgage.
One-third plan to use superannuation to pay off mortgages and use the aged pension to live on.
For those with enough equity in their homes, selling and moving to something smaller and cheaper is the only solution.
Their average current superannuation pot is $180,467 and think they can grow this to $316,666 by retirement.
But this is still short of $749,824, the amount they think they need in retirement.
RaboDirect’s General Manager Greg McAweeney says the numbers fall worryingly short of the amount they need to live 20 years in retirement.
“The retirement shortfall is worsened by the fact that, generally, people aren’t planning for the improvement in life expectancy,” he says.
“For instance people who are now 65 are expected to live until 85 for a man and 87 years for a woman and this equates to 20 years in retirement.”
The RaboDirect annual National Savings and Debt Barometer surveyed 2,322 Australians aged 18 to 65.
- Baby Boomers are already living on a tight budget. More than seven in 10 (72%) are reducing their power usage to save money
- 68% are doing their own odd jobs rather than employing a tradesman.
- Despite high levels of concern amongst Baby Boomer mortgagees, a significant proportion does not know what the rate is on their mortgage (16%).
- 48% of Baby Boomers said they expected to run out of money during retirement. This is down from 57% last year, indicating an increase in confidence.
- 29% of the Baby Boomer generation expect to have a mortgage when they retire.
RaboDirect National Savings and Debt Barometer 2013, conducted by Rfi