Planning early will stop young Aussies going grey over retirement


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Young Australians are going grey with stress over their retirement savings, decades before they'll need to rely on them.

A survey by Franklin Templeton found that more than 70% of Gen Y (age 21-38) and Gen X (age 39-54) respondents suffer stress or anxiety over their retirement savings and investments, compared to 67% of baby boomers (age 55-73).

It's no surprise then that nearly half Gen-Yers surveyed check their savings progress at least monthly.

"We often hear that retired Australians or those nearing retirement are highly concerned about the adequacy of their finances to support their retirement," says Manuel Damianakis, head of retail at Franklin Templeton in Australia. "However, concern among younger Australians is even more widespread."

The stress and anxiety felt by young Australians are matched in equal parts by pessimism and fear about the future.

73% of Gen Y respondents and 68% of Gen-Xers believe they are behind on saving for retirement, while 29% of millennials and 20% of Gen Xers believe they will never retire.

62% of Gen Y respondents and 36% of Gen-Xers reported having less than $50,000 in total savings for retirement.

The research also calls into question Australia's global reputation as easygoing and carefree. It turns out we stress more about retirement finance than the US (67%) and Canada (68%), and China (68%).

This is despite Australia boasting a world class retirement system - third best in the world, according to the Melbourne Mercer Global Pension Index.

"Australians need to better understand the benefits of saving early and often, even in small amounts. Seeking financial advice and having a sound written plan for retirement savings, both in super and outside of it, will help Australians to face their future with improved clarity and confidence," says Damianakis.

Closely related, the ARC Centre of Excellence in Population Ageing Research (CEPAR) has found a link between taking out a home loan and increased engagement in superannuation.

"Super fund members who took out a new residential mortgage in 2014 changed their super contribution behaviour around the time they took out their mortgage compared to those who did not take out a mortgage," says Hazel Bateman, CEPAR Deputy Director and Professor at the UNSW Business School.

"Those taking out a mortgage to buy an investment property tended to re-weight their portfolios towards real estate and away from their super, but owner-occupiers tended to build up their super after the real estate purchase," says Professor Susan Thorp of the University of Sydney Business School.

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David Thornton was a journalist at Money from September 2019 to November 2021. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.

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