Australia's retirement outlook is facing increasing strain due to the rising cost of living and the growing number of people expecting to carry mortgage debt into retirement. Although Australia still ranks among the top 10 countries for retirement security, financial concerns are intensifying, particularly amongst younger generations who are anticipating a more costly and less predictable future.
Many retirees are already experiencing higher costs than expected, especially in healthcare and ongoing support. This leaves them feeling vulnerable despite years of financial preparation. Research conducted by international investment firms indicates that older Australians are struggling more than previously thought. Meanwhile, Australians under 45 are preparing for retirement costs that may exceed $100,000 per year, which is significantly more than the current average of $55,000 for existing retirees.
Housing debt is a major factor. With more Australians likely to reach retirement age while still paying off a mortgage, the financial strategies that worked for earlier generations may no longer be sufficient. Inflation is also a growing concern. Four in five Australians surveyed said inflation poses a serious risk to their retirement savings, marking the highest level of concern seen worldwide.
Younger Australians appear more pessimistic than older age groups. One in three Millennials expects to retire with a mortgage. In comparison, most current retirees own their homes outright, which helps explain their relative peace of mind. While some experts believe that younger Australians may be overestimating the amount needed for retirement, others highlight genuine rises in living expenses, new lifestyle expectations and reduced housing affordability.
Even though inflation may be easing in Australia, the economic impact has already taken hold, with older residents feeling the effects sharply. More than 25% of current retirees are worried about outliving their retirement savings. Concerns over the future of government benefits are also adding to public anxiety. Despite a respected retirement system, over half of Australians surveyed admit they believe it would take a miracle to retire securely, a level of pessimism that surpasses the global average.
Australia continues to hold seventh place among the 44 countries ranked globally for retirement security. However, it has seen a small drop in its financial stability score during retirement, as countries like South Korea and Singapore advance.
