Retirement should be a time of relaxation and enjoyment, but for many Australians, it is overshadowed by a growing fear of outliving their savings. This fear, now commonly referred to as “FORO” (Fear of Running Out), is becoming increasingly prevalent among working-age Australians and retirees alike.

The Reality of FORO

According to recent research, four in five working-age Australians believe they have a 40% or greater chance of outliving their retirement savings. Shane Mitchell from Inspired Money highlights the gravity of this concern:

“This is a massively important distinction we have got to make… people who have already put in decades of work on building sites or in factories really look forward to retirement.”

The Burden of Mortgages and Renting

The study also revealed that 30% of Australians expect to still be paying off a mortgage during their retirement, and 20% of retired Australians are currently renting. Pat Sullivan from Inspired Money explains:

“We tend to presume we’ll be homeowners and mortgage-free, but having unresolved debt or needing to draw down on savings to pay rent is likely to be a big financial burden for many.”

Gaps in Financial Planning

One of the alarming findings from the research is that half of all retired Australians don’t know how much money they can afford to spend per year without outliving their savings. Moreover, 67% haven’t planned or are unaware of the age they need to plan for in retirement. Shane stresses:

“It’s concerning that many are unaware of the financial realities of retirement. A robust superannuation balance should be part of a ‘whole of wealth’ retirement plan.”

The Impact of Rising Costs

The rising cost of living exacerbates these concerns, with 42% of retirees reporting a worse financial position compared to a year ago, and 96% citing rising living costs as a negative impact. Pat notes:

“With rising costs in all aspects of our lives, many Australians are already thinking they would need to save more to afford a comfortable retirement.”

The Need for Quality Financial Advice

A significant number of Australians rely on free online sources for retirement planning, which can be inadequate. Shane Mitchell advises:

Quality financial advice can make a real difference to the retirement outcomes and experience for Australians.”

In conclusion, the fear of running out of retirement savings is a pressing issue that requires immediate attention. Effective financial planning and quality advice are crucial in ensuring that Australians can enjoy their retirement without the looming anxiety of financial insecurity. At Inspired Money, we are committed to helping our clients navigate these challenges and build a secure financial future. If you have any concerns over the longevity of your retirement savings please reach out to one of the Inspired Money team for an obligation free consultation, it something that will definitely put your mind at ease.

Written by

Inspired Money