Cost-of-living pressures over the past 12 months have prompted more young Australians to take action regarding planning for retirement, according to research conducted on behalf of HESTA[1].
The national survey of 1,000 Australians asked respondents what cost-of-living pressures over the past 12 months had caused them to do, finding that 49 per cent of 18 to 39-year-olds had taken more action to plan for their retirement, such as salary sacrificing or using online calculators to understand if their super was on track.
This compared to 44 per cent of 40 to 54-year-olds and 29 per cent of 55-plus respondents who said they had taken more action to plan for retirement.
HESTA CEO Debby Blakey said the findings demonstrate a growing awareness of the importance of super among younger generations of working Australians.
“It’s encouraging to see younger Australians actively planning for their retirement because even small changes made now can have a big impact down the track,” Ms Blakey said.
“For many young Australians, super will be their biggest financial asset. Their parents are also starting to retire with super balances built over their working lives.
“This younger generation is seeing first-hand how important super is to long-term financial security and the power of growing retirement savings over time.”
The survey found that across all age groups, 41 per cent of respondents had taken more retirement planning action in the past 12 months, 51 per cent made no change and 6 per cent were taking less action, such as cutting back salary sacrifice contributions or withdrawing super for circumstances such as early access due to financial hardship.
The current economic challenges may be sharpening the focus for those under 40 on the importance of planning to improve their financial future.
The research found the top concern about retirement was running out of money, with 68 per cent of under 40s and 64 per cent of 40 to 54-year-olds worried about being unable to afford basic needs as they aged. This figure moved to 51 per cent for those aged 55-plus.
Meanwhile, 52 per cent of 18-39-year-olds were concerned about being unable to maintain their desired lifestyle in retirement, compared to 49 per cent of 40–54-year-olds and 45 per cent of those aged 55-plus.
The research showed that women were more likely than men to be worried about running out of money in retirement (65 per cent of females versus 57 per cent of males). Of equal concern for women were fears about health issues and medical expenses in retirement (62 per cent versus 52 per cent of men surveyed).
“We know that many of our members are doing it tough right now and experiencing cost-of-living pressures,” Ms Blakey said.
“When you’re facing these immediate concerns, it can feel challenging to turn your mind to long-term financial planning. It’s important to remember that taking that first step to improve your long-term financial future can be so powerful over time.”
Ms Blakey said that over the past financial year, 68,000 members had used the Fund’s online HESTA Future Planner tool that helps members plan for their retirement. She added two-thirds of those who used the tool during this period examined the impact of making additional contributions, changing their retirement date, or changing investment options.
“We know that appropriately tailored help and guidance can be beneficial for our members’ financial literacy and confidence. We’re seeing that in just 10 minutes, members can make some progress towards improving their long-term financial future,” Ms Blakey said.
[1] The research by PureProfile took place between 8-12 March 2024 with a sample of 1000 people across Australia resembling population by gender, age, state, and location.
