Australians’ retirement timing and preparedness vary widely, shaped by factors such as confidence in financial planning, health, and personal obligations. According to Vanguard’s 2024 How Australia Retires research, nearly 50% of Australians retire earlier than anticipated. While the average retirement age among current retirees is 61, working-age Australians envision an ideal retirement at 62.6, but they realistically expect to retire closer to 67.9. Notably, those less confident in their retirement plans are more likely to retire unexpectedly early (62%) compared to those with high confidence (40%), often due to health or caregiving responsibilities.

Retiring earlier than expected can create financial challenges, particularly when retirees must determine if their savings will last. Vanguard found that retirees with a clear retirement strategy are four times more likely to feel confident about their financial security in retirement compared to those without a plan.

Meanwhile, a study by the Association of Superannuation Funds of Australia (ASFA) reveals that more Australians plan to work beyond age 65, with about 25% of older workers intending to continue for social engagement. However, around 14% believe they may never retire due to financial constraints.

A growing concern for Australians is longevity risk—the fear that their funds may not sustain them through a longer-than-anticipated lifespan. Life expectancy continues to increase, amplifying the importance of sound financial planning. Vanguard’s research shows that half of the surveyed Australians are uncertain about whether their savings will be sufficient. Additionally, 67% of Australians, particularly older age groups (72% of those aged 65–74 and 78% of those 75–99), have yet to assess the age to which they need to plan financially.

This highlights the need for both early and continued financial planning to navigate an uncertain retirement landscape effectively.

Almost three in five retirees believe they have a 40% or greater likelihood of outliving their retirement savings. Additionally, almost one in five retirees believe they are at significant risk, with a perceived 90% or greater likelihood of running out.

Perhaps more concerningly, one in two retirees do not know how much they can spend each year in order to not outlive their savings.

Nearly three in five retirees in Australia believe there’s at least a 40% chance they could outlive their retirement savings, with nearly one in five perceiving a 90% or higher likelihood of running out of funds. Compounding this concern, half of retirees aren’t certain how much they can safely withdraw annually without jeopardizing their financial security over time.

The Role of Financial Advice in Building Retirement Confidence

Vanguard’s research highlights a link between financial advice and retirement confidence. Australians who reported feeling “very” or “extremely” confident about their retirement were more likely to have consulted a financial adviser (33%) compared to those moderately confident (29%) and those with low confidence (23%). This trend suggests that professional guidance may help retirees feel more secure and informed about their financial future.

Despite the benefits, access to affordable, quality financial advice remains a challenge in Australia. Both government and industry studies have recognized an “advice gap” that leaves many Australians without guidance in planning for retirement. Vanguard emphasizes that seeking financial advice is particularly beneficial in retirement but also valuable in the years leading up to it, as earlier planning allows more time to benefit from the advice’s impact on financial health.

Quality financial advice does more than enhance returns; it builds a sense of financial security and readiness. Vanguard’s findings reveal that 37% of advised Australians feel highly confident about retirement, and 43% report having a clear retirement plan, underscoring the broader, peace-of-mind benefits of sound financial planning.

Rick Maggi CFP, Westmount Financial, Financial Advisor (Perth)