Australians are no longer confident of a comfortable retirement despite the impact of COVID-19 expected to be short-lived, new research finds.
Survey results from State Street have found that 42 per cent of Australians are not optimistic about their retirement outcomes, a level similar to 2018 suggesting the lack of confidence may not solely be attributed to COVID-19.
Despite the impacts of COVID-19, the report showed many Australians were optimistic about the figure.
“We wanted to assess whether the impact of COVID-19 was expected to continue into the long term, therefore having greater implications for retirement savings,” said Jonathan Shead, State Streets’ head of investments, Australia.
“The majority of Australian savers felt that the impact that COVID-19 would have on their finances would most likely last a year or less.”
The report found that COVID-19 is just one of the factors limiting retirement confidence. Whilst most thought that the financial impact of the crisis would be short-lived, 38 per cent of the Australian sample said that the COVID-19 situation was having a high impact on their retirement confidence levels.
“I am most concerned about the time it will take for my superannuation balance to recover from the fall in the stock market since the outbreak of COVID-19,” one responder noted.
However, other key areas impacting retirement confidence in Australia were no spare money to save for retirement, uncertainty about retirement plans, and lack of trust in the retirement system.
Despite fears of not having enough in retirement, the majority of Australians have not made changes to their retirement savings plan. The majority of the Australian sample (67 per cent) have not made any changes to the amount they save into their retirement savings plans; however, 21 per cent said they have reduced or stopped their rate of saving. Only 7 per cent of the UK sample had done the same.
“Members expect the impact of COVID-19 to be short-lived, and aren’t changing their retirement saving behaviour. Australians’ priorities are understandably going to be focused on the short and medium-term challenges associated with the crisis, but it is critical that retirement savings are not put on the back burner, leading to negative long-term consequences,” Mr Shead said.
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Article reproduced from Nest Egg