An international study of retirees shows Australians have been the hardest hit by the global financial crisis. The report by HSBC shows the crisis has caused the biggest drop in incomes for Australians entering retirement among the 15 countries surveyed. The reason is the big exposure that superannuation funds have to shares.
"Australians have felt the GFC acutely and for a prolonged period because of the strong links between our pension and superannuation systems and equity markets, which saw more than 50 per cent falls following the crisis," said Graham Heunis, HSBC Australia's head of retail banking and wealth management. "It has resulted in many Australians' retirement plans being disrupted."
According to the survey, almost 80 per cent of Australian retirees reported an income fall upon retiring. More than 40 per cent reported their income falling by half. That was about double the global average and way ahead of other western markets including the US at 16 per cent and Britain at 24 per cent.
Apart from the financial crisis, Australian retirees blamed the drop in income on unexpected events or expenses such as children moving back home or health-related expenses as well as insufficient planning.
About 40 per cent of retirees say they did not prepare adequately or at all for a comfortable retirement. About 60 per cent said that their preparations for retirement turned out to be at least adequate.
HSBC's Future of Retirement: Life After Work? report also shows that one in six working-age Australians believe they will never be in a financial position to fully retire. That is higher than the global average of 12 per cent and on a par with the US and Britain.
Australians are working longer but are also embracing semi-retirement in greater numbers. On average, Australians expect to fully retire at 64 (compared with the global average of 59), which is three years later than when their parents retired.
One-third of Australians aged 55 to 64 are semi-retired.