New research shines light on why many retirees opt for minimum super withdrawals
New survey research commissioned by Super Consumers Australia reveals the reasons why retirees often choose to withdraw the minimum amount from their super. The study also shows that some older Australians don’t fully grasp how the retirement system works.
The research reveals that over half (61%) of retirees who are accessing their super drew down at the minimum legislated rate last financial year. Surprisingly, most of these retirees are confident that this minimum is sufficient for their needs, with 56% revealing they have no desire to spend more, 37% following expert advice, and 30% having additional income sources.
However, 19% of retirees who were drawing down at the minimum said they thought it was a government recommendation, highlighting a gap in understanding. About half of older Australians did not have a good grasp of the tax exemptions applicable to superannuation during retirement.
“Our research clearly shows that the retirement system is not working well for everyone”, says Gerard Brody, Acting Director of Super Consumers Australia.
“The system is complex, demanding consumers to possess high levels of knowledge and engagement to maximise their retirement outcomes. Yet our research also found that only 43% of older Australians have sought some kind of advice about money in retirement, and only 21% expressed trust in advice from a super fund.”
“As the Government seeks ways to enhance retirement outcomes, it should begin by having an independent agency link Australia’s government-provided retirement planning services and tools on one website. Additionally, there’s a pressing need for consumer protections to make the retirement system safer for everyone, including default products and performance testing, mirroring the safeguards in the accumulation phase.”
Additional research insights:
- Financial comfort: About 80% of older Australians feel financially comfortable or are getting by on their current income.
- Challenges for specific groups: However, older renters, people with a disability, and people without super face greater financial difficulties.
- Many not yet drawing down: Over half (58%) of over 65s who have an inactive accumulation account (which they are no longer contributing to) said they do not need to start drawing on their super.
The survey was completed by 1,100 Australians aged 65 and older. The results can be found here.