People will have a more financially comfortable retirement than they think, according to a new report by Australia’s Grattan Institute, an independent think tank.
The report, called Money in retirement: more than enough, claims that Australian retirees are less likely to suffer financial stress than their working-class counterpart, and will be more likely to afford optional extras.
Retirees can expect a pension income of at least 91% of their pre-retirement income, which is well above the Organisation for Economic Co-operation and Development’s endorsement of 70%, according to the Grattan Institute, .
In addition, through a combination of the government pension and compulsory superannuation savings, retirees will also experience a pay rise when they retire.
John Daley, chief executive of the Grattan Institute, said: “The financial services industry ‘fear factory’ encourages Australians to worry unnecessarily about whether they’ll have enough money in retirement.”
Even though the worry about not saving enough for retirement is a widespread one, Australians tend to spend less after they retire and even less when approaching old age, the report says.
However, the report also calls for a boost of retirement incomes for the poorest Australians, since the system is believed not to be working for low-income retirees who are forced to rent, with the ownership trend for over 65s set to decline from 76% to 57% y 2056.
The report calls for a 40% increase in the maximum rate of Commonwealth rent Assistance which is estimated to be worth $1,020 (£783 €899) a year per retiree.
