Consumer spending survey

How has the global financial crisis affected CHOICE members?
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04.Retirement plans

Most households have experienced a large reduction in wealth over the past year. The stock market crash is largely to blame, with individual investors’ share portfolios, managed funds and superannuation accounts plummeting as a result. That other great avenue for our capital, residential property, has also reduced in value in some areas since the economic downturn hit.

Sixty-four percent of respondents reported a decline in the value of their overall assets since the same time last year, while 18% reported their overall wealth has stayed about the same. In 15% of cases, the value of household assets actually increased.

Not surprisingly, superannuation losses are leaving many members fearful about their future. While 57% of respondents believe they’re on track for a comfortable retirement, almost a third do not, and 12% don’t know or haven’t thought about it – including four out of 10 respondents under 35 years of age.

As you’d expect, confidence about the future was related to the level of household income; 50% of respondents with an annual income under $35,000 don’t believe they’re on track for a comfortable retirement, but the figure drops to just 19% for respondents with more than $150,000. Age was also a factor, with the general trend being that confidence about a comfortable retirement increases as respondents got older. Nearly three-quarters of those aged 66 and older – many of whom may already have finished working – believe they’re on track for a comfortable retirement.

What members say about the future

Thirty-one percent of survey respondents believe they’re not on track for a comfortable retirement, with many blaming sharemarket declines.

  • Our self-managed superannuation fund – all in blue-chip stuff – has decreased in value by so much I can probably never retire in comfort and maintain an ordinary lifestyle. My wife and I earn slightly more than the sum that would enable me to get a part pension, and I can’t get a pension until she is 65 anyway. So much for being a taxpayer for over 50 years!”
  • “As a retired couple, we will need to devise ways to overcome lost super. However, we expect financial recovery will [take a long time], as the unemployment problem is yet to impact fully.”
  • “My self-funded pension is losing value and living costs are rising. The combined effect does not augur well for my financial future. I would have to liquidate assets or apply for a government part-pension to maintain my present lifestyle.”
  • “If the stock market recovers within two years our retirement position will be reasonable. Any longer is of considerable concern.”
  • “I retired last year and put my money into term deposits in a pension account, which I feel is keeping my money secure until the economy picks up. I was fortunate that my superannuation had not lost any money in the 12 months before I retired. I was adamant I could not afford to lose any after I retired; hence the term deposits.”
  • “I have had a steady career for the last 30 years and am due to retire next year. With a considerable mortgage debt and son in high school I do worry about my financial future and how I will manage during my retirement. I also have concern for the next generation and how they will cope in the current and future economic climate.”
  • “I am on a superannuation pension from a fund that is less than half the value it was a year ago. This means it will run out much earlier than it was designed to do two years ago, and I will then have to exist on a full Centrelink age pension.”

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