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Retirees 'running out of savings' well before death

Business

The vast majority of retirees have depleted their savings to zero before they die, according to the superannuation industry group, ASFA.

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In its campaign for an increase in compulsory superannuation guarantee to 12 per cent, ASFA used Tax Office evidence to rebut claims that retirees were hoarding their savings and living on the income from investments.

It said about 1.7 million Australians aged 70 and over had no superannuation. That represented more than 60 per cent of the demographic.

However, an important factor is those people in that age group had limited access to the superannuation system which only began in 1991.

“The median age of death for men is 78 and for women it is 84. By those ages, the vast majority of retirees have reduced their superannuation balance to zero,” the ASFA report said.

It said there was only a small number who had a substantial superannuation balance at death and that inflated averages.

“We don’t have a systemic problem with retirees underspending or bequeathing their super – quite the opposite. The majority of Australian retirees run out of super well before the end of their lives,” said ASFA chief executive Martin Fahy.

“Sadly this new data indicates that 90 per cent of Australian retirees aged over 80 had no superannuation in their final years.

“The situation is much worse for women. 85 per cent of women who passed away, aged 60 and above, didn’t have any super left at all.

“The main challenge for the Australian superannuation system is to deliver higher superannuation balances at retirement.

“The solution for ensuring the adequacy of retirement incomes is moving the Superannuation Guarantee to 12 per cent.”

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