Half of us are terrified of retirement. Here’s why you might be OK

Last year I wrote a column taking a long hard look at a pattern I kept seeing in the superannuation industry: report after report measuring how anxious Australians feel about retirement, with very little action to show for it.

PR dressed up as progress, I called it, and my readers agreed loudly. We don’t need more reports, we need more action to help members navigate their retirement.

So when Colonial First State’s annual Rethinking Retirement report landed on my desk this week, I’ll admit I picked it up with a slightly raised eyebrow. But then I read it properly. And then I read it again. Because CFS has actually done a lot of work on its retirement and advice propositions this year, not just commissioned another survey.

And there was a finding buried in that report truly worth sharing and talking about today. It could be the most important thing I’ve read about retirement all year.

It concerns the amount of worry people are expending on retirement, possibly unnecessarily, and how such worry has surprisingly little to do with the money they have as they approach retirement but more to do with how proactive they are in understanding their real position.

According to the CFS report, almost half of all Australians (49 per cent) don’t feel prepared for retirement. Among that group, more than half (56 per cent) are actively worried about it.

We don’t need an actual problem to feel real anxiety. We just need an unanswered question.

However, among Australians who do feel prepared, such worry falls to just 15 per cent. Same economy, same cost of living, same grocery bills. The difference? Whether they know where they stand.

Picture two people sitting next to each other on the train, both with about the same amount in super, both stretched by the same cost-of-living crisis. One is sleeping fine at night. The other is staring at the ceiling at 2am.

The gap between them isn’t the size of their super balance. It’s the fact that one has looked at their numbers and worked out what their retirement could be like.

That means understanding whether the age pension will kick in and when, how it sits alongside their super, what kind of fortnightly income that combination can really deliver, and whether they still need to work or actually have more choices than they had considered. Even a rough picture of that future is worth more than years of vague hoping that all will work out fine.

Many people in the industry would see this and call it an advice gap, a signal that Australians need to go and see a financial adviser. And for people in complex situations, that’s sometimes true.

But I’d push back hard on that as a catch-all answer. For most Australians, this isn’t about advice. It’s about information and understanding. And most super funds already have the calculators, retirement income estimators and member support on their website, often available completely free, that can paint you that exact picture. You don’t need to pay anyone anything to start understanding what your retirement could really look like.

And right now, only half of Australians have done that. Just one in 10 feel truly ready. Australians want to retire at 62, but most think 66 is the honest answer, and those four years in between are probably your best.

The long-haul trips, the young grandkids, the big days out that don’t cost you a week of recovery. Moreover, what people think they need to retire on comfortably has jumped $183,000 in a single year, crossing $1 million for the first time.

For many people approaching retirement now, that number lands like a sucker punch. But here’s what most Australians don’t realise: a couple with $500,000 in super can often generate a very similar amount of retirement income as a couple with $1 million, simply because the age pension fills the gap.

That’s precisely why understanding your numbers matters so much more than chasing someone else’s benchmark.

In Prime Time, I wrote about the way our brains naturally treat uncertainty as a threat. It’s something hardwired into us since our caveman days, when not knowing what was around the corner could genuinely get you killed.

We don’t need an actual problem to feel real anxiety. We just need an unanswered question. And “will I actually be OK in retirement?” is one of the biggest unanswered questions most Australians are carrying around every single day, often for years before they get anywhere near stopping work.

So here’s what I want you to do this week, and I mean actually do, not just think “yes I should do that” and move on.

Log into your super fund’s app or website and find its retirement calculator or income estimator. Almost every major fund has one now. Put in your current balance, your age, and what you think you’ll contribute between now and when you want to retire. Then look at what income that translates to each fortnight. That’s it – the first step.

It won’t give you a perfect answer, and it won’t replace a full financial plan, but it will give you something far more valuable than a vague sense of fear or dread. A number that shows you what your super and savings, combined with any age pension you might be eligible for, can actually generate as a regular income.

Once you have that number, you can start asking the right questions. Is it enough? If not, how far off am I? What would change if I contributed an extra $50 a week? What would change if I worked one extra year, contributed more and drew down less?

This can kickstart a process of alleviating your anxiety, and move you from “I don’t know” to “I know where I stand”. Those are two entirely different emotional places to be in, and you can get yourself from the first to the second in about 30 minutes this afternoon.

Women, as the data continues to show, carry this burden hardest. Nearly two in three women worry they won’t have enough to live on comfortably in retirement, compared with just under half of men.

Women are also more worried about outliving their savings and facing unexpected health or aged care costs down the track. If you’re a woman in your 50s reading this, please don’t let this slide past you. The actions you take in the next five years will shape the retirement you live for the 20 years after that.

The CFS research also found that the No. 1 reason Australians don’t engage with their super is that it feels too complicated. More than a third of disengaged members said exactly that. But I would push against that gently.

The complexity isn’t coming from you. If your fund hasn’t made it genuinely simple to understand what your balance means in real income terms, that’s a problem with your fund’s design of their retirement services and support, not a “you” problem. And it’s worth telling them so.

Because you don’t necessarily need a $5000 financial plan to start feeling better about retirement. What you need is a clear picture of where you stand and a realistic sense of where you’re heading.

Once you have that, you can decide whether the retirement guidance your super fund already offers is enough, or whether you need something more. You can also start making practical decisions about simplifying your finances, working out whether you’re contributing enough, and checking that your investment option still suits your situation in life.

Your super fund should be making all of this as easy as possible for you. The good ones already are.

Bec Wilson is author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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