Australia Today: Middle class, mortgage-stressed and unprepared for retirement

By Liz Maroney, Westlawn Wealth Adviser
SMSF Specialist Advisor™
29 August 2016

Most Australians see themselves as middle class, nearly half live ‘paycheque to paycheque’, three-quarters say their mortgage has a big impact on their lifestyle, close to 3 in 5 are concerned about maintaining their lifestyle in 10 years’ time and 66% feel unprepared for retirement. 

That’s some of the findings from a 3-part whitepaper, Australia Today, commissioned by MLC. The survey of 2,000 Aussies provides a fresh look at our attitudes and perceptions towards financial security, standard of living and expectations of life in retirement.

Costs of a comfortable lifestyle

Part 1 of Australia Today examined how people saw themselves in terms of social class and lifestyle. The majority of those surveyed (66%) saw themselves as either middle class or lower middle class. Only 27% indicated they were working class.

Seven percent believed they sat just above the middle. Interestingly, almost half (44%) of those at the top of the income ladder (household incomes of $200,000+) believed they were middle class, while 23% placed themselves even lower down the social ladder.

How do we define a ‘comfortable’ lifestyle?

Three quarters of those surveyed agreed that ‘having a comfortable lifestyle means having enough money to do what I want, when I want’.

Almost half, however, are spending all their pay packet to pay for it with 46% admitting to living ‘paycheque to paycheque’. Perhaps surprisingly, this includes 27% of householders earning $150,000 to $199,000 and 22% of householders earning $200,000 or more.

If being ‘comfortable’ means having ‘what we want, when we want it,’ what does it cost to maintain this lifestyle?

At least $150,000 a year according to 48% of participants. Being worth $1,000,000 doesn’t make you rich in Australia anymore according to 59%.

Three-quarters (76%) said their mortgage has a big impact on their lifestyle, while 83% agreed that the cost of living today is much higher than the cost of living 10 years ago. Forty-four percent said the cost of living where they live makes it difficult for them to maintain their standard of living.

Maintaining lifestyle a big concern

In the second instalment of the Australia Today research, many respondents reported feeling somewhat despondent about their future prospects.

Close to 3 in 5 (56%) expressed concerned about being able to maintain their lifestyle in 10 years’ time. One in five (17%) indicated that they will rely on family inheritance to pay off their mortgage or to ensure their financial security.

A third (35%) were concerned about job security. And nearly 3 in 5 (56%) were concerned about being able to maintain their lifestyle in 10 years’ time.

Those aged 50 to 70 (61%) – who are more likely to be either retired or approaching retirement – were more likely to worry about holding onto their current lifestyle.

Are we on the path to self-funded retirement? Will we have enough money to see us through? These are the questions asked in Part 3 of Australia Today.

Two in five (43%) didn’t believe they would be able to fund their lives post-work, agreeing that they would be relying on the Australian government in retirement. Those aged 50 to 70 were more likely to agree (49%), while those aged 25 to 29 were much less likely to agree (33%).

Of those currently retired, 53% are relying on the government and 44% of those transitioning to retirement will rely on the government in retirement.

Being prepared for retirement makes all the difference

Two in three of those not currently retired (66%) admitted to being ‘slightly or not at all prepared’ for retirement.

Only 15% felt ‘very well or fairly well’ prepared for retirement. Young people aged 25 to 29 were significantly more likely to feel unprepared (79%). So too, were women (74% compared to 57% of men).

Knowledge gained from working with a financial adviser or accountant made a significant difference to how prepared participants felt when it came to self-funding their retirement.

Those seeking the advice of a financial professional were significantly more likely (21%) to feel ‘very well/fairly well prepared’ for retirement, while those who used financial advisers specifically were even more confident (35%) than those who did not use any type of financial professional at all (only 9% of these felt very well/ fairly well prepared’ for retirement).

Only 54% believed their super will be enough to see them through their post-work lives.

However, those with financial advisers (76%) and those with accountants (63%) were more confident, being much more likely to agree that they would rely on their super in retirement.

Those who used financial professionals were also much less likely to say they would rely on the government in retirement: only 27% of those with a financial adviser and 31% of those with an accountant indicated that they would rely on the Australian government in retirement.

For those without a financial adviser or accountant, nearly half (49%) said that they would have to rely on the government in retirement.

How prepared are you?

Do you feel prepared for retirement? Find out how a financial adviser can help you prepare for the lifestyle you want to enjoy in retirement. Contact Liz Maroney today:

Copyright © 2016

Westlawn Wealth Adviser, Liz Maroney is a ...

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