Cost of living pressures are motivating the under 40s to plan for retirement – HESTA

Increasing numbers of workers under 40 years of age are taking action around planning for retirement, research conducted on behalf of HESTA has shown, prompted by cost-of-living pressures. 

A national  survey of 1,000 Australians asked respondents what cost-of-living pressures over the past 12 months had caused them to do, finding that 49 per cent of 18 to 39-year-olds had taken more action to plan for their retirement, such as salary sacrificing or using online calculators to understand if their super was on track.

The findings will be of interest to approved providers with larger numbers of employees and services as they seek to add value to their employee supports. 

For HESTA CEO Debby Blakey the findings demonstrate a growing awareness of the importance of super among younger generations of working Australians.

“It’s encouraging to see younger Australians actively planning for their retirement because even small changes made now can have a big impact down the track,” Ms Blakey said.

“For many young Australians, super will be their biggest financial asset.”

As the ‘Boomer’ and later stage Generation X cohorts enter retirement, younger people are seeing first hand how important superannuation is to long term financial security and the power of growing retirement savings over time, she added.

The survey found that across all age groups, 41 per cent of respondents had taken more retirement planning action in the past 12 months, 51 per cent made no change and 6 per cent were taking less action, such as cutting back salary sacrifice contributions or withdrawing super for circumstances such as early access due to financial hardship.

The current economic challenges may be sharpening the focus for those under 40 years of age on the importance of planning to improve their financial future.

The research found the top concern about retirement was running out of money, with 68 per cent of under 40s and 64 per cent of 40 to 54-year-olds worried about being unable to afford basic needs as they aged. This figure moved to 51 per cent for those aged 55-plus.

Meanwhile, 52 per cent of 18-39-year-olds were concerned about being unable to maintain their desired lifestyle in retirement, compared to 49 per cent of 40–54-year-olds and 45 per cent of those aged 55-plus.

Women were more likely than men to be worried about running out of money in retirement (65 per cent of females versus 57 per cent of males). Of equal concern for women were fears about health issues and medical expenses in retirement (62 per cent versus 52 per cent of men surveyed).

“We know that many of our members are doing it tough right now and experiencing cost-of-living pressures,” Ms Blakey said.

“When you’re facing these immediate concerns, it can feel challenging to turn your mind to long-term financial planning. It’s important to remember that taking that first step to improve your long-term financial future can be so powerful over time.”