Some 20% of Australians are comfortable about funding their retirement but 50% are worried they wouldn’t have enough money to retire when they planned to, and that’s a rise from 40% on the previous year.
Rising interest rates and the cost of living are certainly behind this jump in those worrying but these findings from a State Street Global Advisors survey, reported in The Australian, reminded me of a line in the movie Bridge of Spies. James Donovan (played by actor Tom Hanks) asks Rudolf Abel (played by Mark Rylance) who was set to be deported to Russia as a traitor: “Aren’t you worried?” To that, Abel responded, “Would it help?”
Just like hoping for a bit of luck, worrying is not a strategy! It’s time Australians became realistic and less tight with their money or their time and made a lesser commitment to worrying and more time doing something about their expected future impoverished retirement.
While the number saying they’d never be financially secure to retire has risen from 10% to 14%, 46% were worried they wouldn’t be “financially prepared” by the time they planned to stop working. That’s a 4% lift in a year.
This makes terrible reading and as a financial adviser and media money educator it’s a personal concern. But another survey does a lot to explain why too many Aussies find themselves in this pecuniary predicament.
Finder’s 2022 Financial Advisor Report revealed the following snapshot on what Australians think about financial advice:
• 16% of Australians (the equivalent of 3.2 million people) use a financial advisor or planner.
• The top reason most Aussies don't use a financial advisor is that they prefer to manage their own money (42%). The second most common reason is that it's too expensive (39%).
• The majority of Australians (57%) aren't prepared to spend anything to receive financial advice.
• The rest of the country is prepared to pay $1,164 on average for financial advice.
So, while one survey says 50% are worried, they wouldn’t have enough money to retire, 57% won’t spend anything to do something about it!
Look at those words “aren't prepared to spend anything to receive financial advice”, which has to be at the heart of the problem. Unless people stop being ‘tight’ about trying to get wealthier, then poor future retirements will not only create a materially sadder life for too many Australians, it will mean the taxpayer will have to help in funding more welfare.
Of course, financial advice has other turn-off factors, such as:
1. The poor reputation of some advisers.
2. The cost of advice is high and lot of that has come from more regulation to build in safeguards for consumers.
3. It’s an investment in the future, but, like super itself, retirement always seems so far away for too many people until it’s not!
Right now, the Albanese Government is trying to make financial advice simpler and less expensive by reducing regulatory demands, which make financial plan construction very labour-intensive, time consuming and therefore too pricey for average Australians.
The goal of the Government is to let super funds give limited but useful advice, which would be cheaper and therefore more accessible. However, the attitude of the 57% not willing to pay for any advice has to change.
This revelation implies that 57% of Australians wouldn’t buy a book or a video to give them the guidelines to avoid a terrible, money-short retirement.
Glenda Korporaal interviewed State Street’s head of investments Australia, Jonathan Shead, who made the following observations: “There was a change in sentiment, 73 per cent cited -concerns about inflation and the cost of living, 38 per cent were worried about mortgage debt and housing costs, and 35 per cent said they were concerned about being able to fund potential medical ¬expenses.”
Clearly, the cost of living makes many people think they can’t afford advice but sometimes advice is the solution. A caller to Ben Fordham’s 2GB breakfast show yesterday told Ben he reviewed all his bills, contacted all his suppliers of services and asked for discounts and managed to save $4,000 a year!
In my book Join the Rich Club I looked at what people do to find money to save to invest. Doing a budget looking at all the areas of spending and then trying to GST your life by cutting outlays by 10% can deliver surprise savings!
Worrying isn’t a strategy. In fact, when the going gets tough, the tough and the smart get going. Another old saying, if nothing changes, nothing changes and then I’d throw in my favourite: if anything’s worth doing, it’s worth doing for money.
If you can’t afford a financial adviser today, at least buy a book, or go on YouTube and start using your time more effectively and wisely, to make sure you have less reason to worry.