State of Retirement Finances: 2024 Edition

The financial outlook for baby boomers has gone from boom to bust, as climbing expenses and outstanding debts threaten to poach their nest egg.

A new Minty survey reveals 2 in 3 Australian retirees say the country is in a retirement crisis (66%). About 40% worry they will outlive their retirement savings — and 1 in 5 already have (19%).

Nearly a quarter of all retirees even say they won't have enough saved to cover their eventual funeral expenses (23%).

The situation is especially bleak for retired women, who are 33% more likely than men to say they don't have enough money saved for a comfortable retirement. About 28% of retired women have nothing saved, compared to 20% of men.

Despite a few positive developments — a recovering economy and a cost-of-living increase for the Centerlink Pension Payments — the overwhelming majority of retirees say the government should do more to help them (80%).

To learn more about the state of retirement in Australia, Minty Real Estate surveyed 1,000 retired Australians across Sydney, Brisbane and Melbourne. Read on to learn more about the silver squeeze gripping Australian's golden years.

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Why 2 in 3 Retired Aussies Say Australia Has a Retirement Crisis

Heading into 2024, most Australian retirees have a fraction of what they'll need for a comfortable retirement.

Half of Australian retirees have less than $445,000 saved, about four times less than the $1,172,000 experts recommend for retirement (based on 10x the median worker's pre-retirement income).

Those who retired in 2021 or later are in even worse shape, with half sitting on $90,000 or less. Overall, the average retiree has about $269,078 in savings, still less than half the recommended amount for starting retirement ($572,000).

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Given the substantial nest egg needed for an adequate retirement, 40% of retirees worry they will outlive their savings, and 46% say they have no plan if their savings run out.

That risk is real. About 1 in 5 retirees say their savings have already run out (19%), and 1 in 10 (10%) have skipped meals to preserve their retirement savings.

Despite economic progress in 2023, many retirees still feel the lingering effects of a hectic 2022. Nearly 7 in 10 retirees (68%) say the current economic climate has impacted their retirement finances.

Retirees say they are doing the following due to the recent economic climate:

• Spending less because of high costs (47%)
• Feeling the effects of inflation eating into their savings (32%)
• Moving money into less risky investments (10%)
• Preparing to lose more money (8%)

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Unpredictability is still affecting retirees' ability to plan ahead, with 62% concerned the 2024 presidential election will impact their retirement savings.

25% of Retirees Say They Have No Money Saved for Retirement

At the most alarming end of the spectrum, 25% of retirees say they have nothing saved for retirement. In addition, more than 1 in 7 retirees (15%) say they rely on their children for financial support.

In Australia, the financial landscape for retirees shows a mix of reliance on government pensions, superannuation, and other personal investments as primary sources of income. The Age Pension remains a significant source of income for many, with a considerable proportion of the older population receiving it. Specifically, as of June 2021, two-thirds (67%) of individuals aged 65 and over were receiving some form of income support payment, with the majority on the Age Pension​ (AIHW)​. This reliance on government support is reflected in the wider context of retirement planning and savings, where gender disparities and the adequacy of retirement income remain areas of concern.

Retirement income for Australians varies significantly based on lifestyle choices and whether one is part of a couple or single. While exact average retirement incomes are difficult to determine due to the lack of comprehensive tax data on superannuation withdrawals, estimates for required retirement income suggest that singles need approximately $32,000 per year for a modest lifestyle and $50,000 for a comfortable lifestyle. For couples, these figures rise to about $46,000 for a modest lifestyle and $71,000 for a comfortable lifestyle. These estimates are based on lifestyles that allow for basic through to more comprehensive living standards, assuming outright home ownership​ (Super Guy)​.

The income sources for Australian retirees are diverse, including the Age Pension, superannuation pensions, personal investments, rental income, and annuities. The Age Pension is particularly significant, with 53% of retired men aged 45 and over and 46% of retired women receiving Age Pension payments. Meanwhile, superannuation pensions as a source of income have seen an increase, particularly among men, with 35% of men aged 45 and over and 29% of women in the same age group receiving superannuation pensions​ (Super Guy)​.

Many of these retirees blame their lack of savings on their low income while working, but 36% admit they have no money because of their own poor saving habits.

The most common reasons for having nothing saved are:

• They mostly lived paycheque to paycheque before retiring (60%)
• They had to pay for unexpected expenses (e.g., medical, legal, etc.) (41%)
• Their income was too low (40%)
• They had poor saving habits (36%)
• They did not realise how much money they would need in retirement (33%)
• They didn’t take the initiative to properly set up their finances for retirement (28%)
• They thought they'd be able to live entirely off of Social Security (24%)
• They didn't think they'd live this long (13%)

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Another data point that sticks out: Retired women are 38% more likely than men to say they have nothing saved for retirement.

The Dire State of Retired Women's Finances

Decades of inequalities in the workforce are still hurting women in retirement. Nearly 3 in 10 retired women say they have no money saved for retirement (28%). The median retired woman has $100,000 saved, compared to $217,500 for retired men.

It's no leap to connect women's retirement situation to earning lower pay while working. About 53% of women say their income was not high enough to adequately save for retirement, compared to just 35% of men.

Although the gender pay gap remains stubborn today, it was even worse in the past. A U.K. study found that the pay gap for baby boomer women was 3x higher than it is today for millennial women.

Additionally, 56% of women say they retired earlier than planned, meaning they didn't get to accrue the savings they expected to before leaving the workforce. The main reasons women retired earlier than planned involved health issues (37%) and retiring to take care of family (15%).

Many retired women still sacrifice their well-being to look after family and finances in retirement. About 18% say they've skipped medical appointments or treatments to preserve their savings, nearly double the 10% of men who say the same.

At the same time, underestimating the cost of retirement compounded women's savings problem. About 51% of retired women say they did not adequately prepare for retirement, with 58% saying they were surprised by how much money it requires.

This presents a concerning picture, reflective of broader, systemic issues that have impacted their economic security post-retirement. Several factors contribute to this dire situation, rooted in both historical and ongoing disparities in the workforce.

Gender Pay Gap and Superannuation Shortfall: A key factor contributing to the financial insecurity of retired women in Australia is the persistent gender pay gap. This gap has historically limited women's ability to accumulate wealth and superannuation. Because superannuation contributions are proportional to income, lower earnings over a woman's career result in significantly less retirement savings. The ABS data highlights that the main source of income for older Australians is either a government pension or allowance, with a smaller proportion deriving income from superannuation. The reliance on government support underscores the inadequacy of superannuation savings, particularly for women​ (Australian Bureau of Statistics)​​ (AIHW)​.

Employment Patterns and Retirement Savings: Women's employment patterns, often characterised by part-time work and career breaks for child-rearing or caregiving, further exacerbate the retirement savings gap. These employment patterns limit continuous superannuation contributions, leading to lower overall retirement savings. The ABS survey indicates a growing number of people relying on superannuation for retirement income, but with a notable gender disparity favouring men. This disparity points to the systemic issues within retirement savings schemes that fail to account for the non-linear career paths more commonly experienced by women​ (Australian Bureau of Statistics)​​ (Super Guy)​.

Dependency on the Age Pension: The high dependency on the Age Pension among older Australians, with a significant majority of those aged 65 and over receiving it, reveals the reliance on government support in the absence of adequate personal retirement savings. This scenario is particularly pronounced for women, who are more likely to depend on their partner’s income or government pensions due to insufficient personal savings. The reliance on the Age Pension as a primary source of income in retirement further illustrates the financial vulnerability of retired women in Australia​ (AIHW)​.

Retirement Regrets: 1 in 4 Ashamed of Lack of Planning

Retired men and women alike are looking back and kicking themselves for not taking saving more seriously, with 1 in 4 saying they're ashamed of their lack of retirement planning (25%).

About 57% of retirees say they have regrets about their retirement. The most common regrets include:

• They didn't know how much they needed in savings to retire (56%)
• They should have managed their money better before retiring (54%)
• They waited too long to start saving for retirement (49%)
• They didn't prepare adequately for retirement (47%)
• They didn't understand how their retirement savings would be taxed before they retired (37%)
• They wish they had invested in more high-risk/high-reward assets when they were younger (31%)
• They took Social Security benefits too early (25%)
• They're ashamed of their lack of retirement planning (25%)
• They dipped into their retirement savings before retiring (19%)

Waiting too long to start saving for retirement is a major problem for Australians. About 3 in 5 retirees (59%) didn't start saving for retirement until their 30s or older. About one-third (33%) waited to save until their 40s or older, and 13% never even started saving in the first place.

Clocking Out Early: 54% of Retirees Left the Workforce Earlier Than Planned

Even the best plans can catch a snag when life gets in the way. That's especially true for retirement — only 39% of retirees say they actually retired when they planned to do so.

A staggering 54% say they retired earlier than planned — with 82% of that group retiring before age 65. The most common reasons for retiring earlier than planned include:

• Health issues (38%)
• They were tired of working (15%)
• They were laid off or fired and chose not to find a new job (14%)
• They had to take care of family (13%)
• Their company offered early retirement plans (e.g., a buyout, good severance, etc.) (12%)
• They had enough saved (11%)
• They had an unexpected financial gain (4%)

About 15% of retirees say they wish they would've retired later — or not at all. The most common reasons why include:

• They claimed Age Pension​ (AIHW)​ too early (43%)
• They wish they had more discretionary income (41%)
• They didn't save enough for retirement (36%)
• They wish they had more money to pay for necessities (32%)
• They didn't realise how much their standard of living would decline (26%)
• They could have paid off more debt (19%)

That desire to pay off more debt is coming back to bite retirees, many of whom have little opportunity to grow their income.

Retirees Average Over $15,300 in Non-Mortgage Debt

Heading into 2024, about 2 in 3 retirees (63%) say they are in some form of non-mortgage debt. The average retiree owes $15,393 in non-mortgage debt, with credit card debt playing a significant role.

The most common types of debt among retirees are:

• Credit card debt (42%)
• Mortgage debt (26%)
• Auto loan debt (17%)
• Medical debt (13%)
• Personal loans (11%)

1 in 8 Retirees Rely Solely on the Age Pension

The Age Pension has been invaluable to retirees.

According to the Australian Institute of Health and Welfare (AIHW), two-thirds (67%) of people aged 65 and over received the Age Pension, Carer Payment, Disability Support Payment, or JobSeeker Payment as of 30 June 2021​ (AIHW)​. This high dependency underscores the importance of government support in the retirement income mix for many Australians.

Underscoring the necessity of Age Pension, only 42% of retirees say they receive income from their own retirement funds including their Super.

The most common sources of income for retirees are:

• Government Benefits (82%)
• Personal savings (49%)
• Retirement fund (42%)
• Pension (35%)
• Investments outside retirement fund (excluding stocks) (24%)
• Stocks outside retirement fund (16%)
• Inheritance (9%)
• Government assistance (excluding Centerlink / Aged Pension) (8%)

This may explain why 80% of retirees say the Australian government should do more to help people in retirement.

1 in 4 Retirees Can't Afford Future Funeral Costs

When retirees don't have enough saved for end-of-life planning, the burden often falls on surviving family members, complicating an already difficult time. Unfortunately, 23% of retirees say they won't have enough in savings to cover their eventual funeral expenses.

About 45% of retirees say they can't afford to leave behind any inheritance. Some intend to leave an inheritance, only to realise they've underestimated how much money they've spent in retirement. About 54% of retirees say they were surprised by how much it costs to retire.

High costs regularly undermine retirees' savings plans: The average retired household spends $54,975 each year. To address their budget problems, about 70% of retirees say they've cut back on nonessential spending since retiring.

The most common expenses retirees struggle to afford are:

• Groceries (22%)
• Credit card bills (21%)
• Utilities (e.g., electric, water, etc.) (18%)
• Phone/internet/cable bills (15%)
• Medical bills (e.g., prescriptions, treatments, appointments, etc.) (14%)
• Gasoline (14%)
• Insurance bills (13%)
• Taxes (e.g., property taxes, income taxes, etc.) (13%)
• Transportation (e.g., car maintenance, repairs, etc.) (12%)
• Mortgage/rent bills (12%)
• Debt repayment plans (6%)

25% of Aussie Retirees Have Considered Rejoining the Workforce

About 34% of retirees say they're spending money faster than expected in retirement, and 28% say they've already spent too much of their savings.

Despite the emotional attachment many have to their homes, 10% of retirees are considering selling their home to cover costs. About 25% of retirees are considering rejoining the workforce, either through part-time, full-time, or consulting/freelance work.

It's distressing to think about retirees selling off valuables or picking up work to get by, but for some, it's a necessity. About 61% of retirees believe they'll need to make their savings last at least another 15 years.

The most common ways retirees plan to make more money include:

• Part-time employment (22%)
• Selling their possessions (18%)
• Moving to a more affordable area (15%)
• Picking up occasional paid tasks (yard work, babysitting, etc.) (12%)
• Selling their home to downsize (10%)
• Consulting/freelancing (4%)
• Full-time employment (4%)

It's worth noting that not all retirees are eager to resolve their financial situation. About 52% prioritise enjoying retirement over preserving their finances.

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How Homeownership Impacts Retirement

Homeownership can serve as a barometer for how retirees are faring financially. As an unsettling Harvard report noted, "At the median, older renters have only 2% of the net wealth of older homeowners."

In Minty's survey, 76% of retirees identified as homeowners. Just under half of retired homeowners (46%) say their home is part of their retirement strategy, aside from living in it.

Retirees say:

• Their home is a significant part of their inheritance plans (28%)
• They are taking advantage of tax benefits for homeowners (17%)
• They downsized their home (9%)
• They received a home equity loan (3%)
• They are renting out their home or a portion of their home (2%)

Achieving homeownership has never been more important for working Americans who hope for some semblance of a stable retirement.

Aussie Retirement Calculator 2024

Find out roughly how much money you would need in savings to start retirement in 2024, based on the average person's expected retirement income, expenses, length of retirement, and inflation. The estimates may not reflect your specific financial situation.

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About Minty

Minty Real Estate has been on a mission to make selling or buying a home easier and more affordable for everyone. 900,000 annual readers across Australia rely on Minty's library of educational content and data-driven research to make smarter real estate decisions. To date, Minty has helped consumers save more than $9 million on real estate fees.