Young Australians think they’ll never be able to retire
Young Australians are pessimistic about their retirement, but they have one big advantage over older generations.
Young Australians are quite pessimistic about their ability to fund their retirement. According to a new report released today by global asset management firm Franklin Templeton, 29% of millennials think they'll never retire, and two thirds have less than $50,000 in retirement savings.
But it's not just the millennials, currently aged between 25 and 45, who have a negative perception of their retirement. Of those born in generation X, the generation prior to the millennials but after the baby boomers, 20% believe they'll never retire. Instead, a third of millennials and generation X expect to have to work part-time to help fund their retirement.
Looking across all ages, Australians as a whole are more stressed and anxious than those living in other countries. Overall 70% of Australians say they're anxious about retirement, compared to 67% of those in the US, 68% of those in Canada and 68% of those in China.
With property prices continuing to soar while wage growth remains flat, it's not hard to see why younger Australians think they won't have enough to retire. However, head of retail at Franklin Templeton Manuel Damianakis said young Australians do have one big advantage over older generations.
"Younger Australians are often pessimistic about their capacity for home ownership and it appears they are equally perturbed about financing retirement. It is unfortunate younger Australians are feeling this unease when they have one of the greatest advantages for successful retirement planning on their side – time."
How young Australians can use time to their advantage
It's a common saying that, with regards to investing, it's not so much about timing the market but more about time in the market. In other words, the longer you're invested in the market, the better. This is because, historically, the market will always go up over the long term.
The compulsory super system, where employers are required to deposit a percentage of your pay into your super, began in 1991. This means that young Australians will benefit from the compulsory superannuation system for the large majority of their working life.
Here are a few ways to help make sure your super balance is growing:
- Consider salary sacrificing part of your pre-tax income into your super. As well as helping grow your super balance, this process has tax benefits you can enjoy while you're still working.
- Make extra, voluntary contributions to your super.
- Consider switching your super investments to a higher risk option, as higher risk investments have the potential for higher returns over the long term.
- Compare super funds and switch to a fund with lower fees and a longer history of strong returns.