Call for super funds to do more as staggering statistics from TAL show how unprepared we are for retirement

Australia’s superannuation funds have been urged to play a greater role in helping workers prepare for a decent quality of life in retirement.

The call for action from the $3.5 trillion industry comes as it is revealed a third of people don’t know what they will do with their savings after they quit the daily grind.

Data to be released on Monday shows there is room for super funds to provide financial tools and education to their members, particularly in the crucial few years before they retire.

Research by life insurer TAL found 51 per cent of pre-retirees looked to their fund for guidance on retirement decisions — well above the percentage who have opted to engage a financial adviser. Those figures narrowed when people retired, with 45 per cent talking with a financial adviser and 37 per cent still reliant on their super fund.

Interestingly, almost a third of pre-retirees and almost 20 per cent of retirees turn to online sources and Google for information on super and investments.

The survey of 1000 over-55s revealed three-quarters of those yet to retire were engaged or highly engaged with their finances, but one in three didn’t know what to do with their super savings once they retire. The youngest pre-retirees were the most financially stressed.

TAL general manager of growth, retirement and wealth partnerships Ashton Jones said by understanding the expectations and concerns of pre-retirees and the realities of those living in retirement, funds could help more people enjoy a fulfilling and financially secure retirement.

“Super funds can play a pivotal role in helping these members attain the retirement lifestyle they want and deserve,” Mr Jones said.

“Pre-retirees want more information about how much super they need to retire, how much their super balance is likely to provide for them, and how they can improve their retirement outcomes.”

Areas identified for further education and support included providing financial tools to help with retirement decisions, guidance on understanding the age pension and aged care systems, optimising drawdown rates, providing lifetime income products and “guided pathways” to help members choose financial products that are right for them.

The data forms part of TAL’s What I Wish I Knew About Retirement report, which shines a light on expectations of people approaching retirement versus the lived experience of retirees.

Just over a third of those nearing retirement admitted they felt financially unprepared for retirement while a similar percentage said they had yet to take steps to prepare their finances for life after work. Forty per cent had done so by topping up their super.

Almost one-in-four pre-retirees were concerned they would not have sufficient funds to either cover basic costs or maintain a comfortable lifestyle in retirement.

Almost one-in-three of those already retired believed they either wouldn’t have enough to live comfortably, or else be able to cover basic expenses for the rest of their lives while 22 per cent were concerned about their super running out.

While 39 per cent of retirees had taken no action to financially prepare for retirement, those who topped up their investments — particularly their superannuation — felt the most confident about their finances.

On retiring, 34 per cent had converted their super to a regular income stream or pension account, while 27 per cent had kept most of their savings in their accumulation account, 15 per cent had withdrawn all or most of it as a lump sum, and just 7 per cent had moved a portion to a lifetime income product.

In retrospect, retirees who had taken their savings as a lump sum were the least satisfied with their choice, with only 56 per cent saying they were now happy or very happy with their decision, compared to 87 per cent of those who had either moved their superannuation to a pension account or lifetime income stream.