AMP Life Limited
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AFSL No 233671
AMP Financial Services
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Sydney NSW 2000 Australia
Public Affairs
Tel: 02 9257 5615
Email: media@amp.com.au
23 November 2009
**Strictly embargoed to 12.01am Tuesday 24 November 2009**
Retirement expectations out of step with retirement savings –
12 per cent SG would increase adequacy significantly
New research shows that Australians are not saving enough to afford a comfortable retirement yet
they are working less and spending more years in retirement than ever before.
According to the 24th AMP.NATSEM Income and Wealth Report, Don’t stop thinking about
tomorrow, we now expect to spend around 20 years in retirement after age 65. In 1909 only
around half of all Australians lived to age 65.
The report considers how realistic present retirement expectations are given levels of retirement
savings. It considers the impact that increasing future superannuation contributions would have
and whether increased superannuation will rescue baby boomer women from the poverty that
appears likely to await many of them.
To address the critical issue of adequate retirement funding the report considers the benefit of
increasing the Superannuation Guarantee (SG) from 9 per cent to 12 per cent. In 30 years time
the superannuation balances of men are projected to increase by 25 per cent. For women aged 45
to 54, the projected increase is 7 per cent, for women aged 55 to 64 it will be 22 per cent and for
women aged 65 and over the estimated increase is 30 per cent.
Based on NATSEM simulations, increasing the SG to 12 per cent will increase Australia’s
retirement savings substantially and reduce the Age Pension outlay by 2.3 per cent. In 1909 only
23,000 people received the Age Pension. Today 2.3 million are on the Age Pension or 77 per cent
of people aged over 65.
“Australians have very high retirement expectations but we are not saving enough to even afford a
comfortable retirement let alone one that meets our expectations,” said AMP Financial Services
Managing Director Craig Meller.
“Adequate retirement funding is a critical issue that needs to be managed and increasing the SG to
12 per cent would significantly lift the adequacy of future retirement savings.
“Australia is a wealthy nation yet our personal savings, including superannuation, are still
reasonably low. By increasing the SG to 12 per cent the average superannuation balance could
increase by one-quarter.
“As a nation we need to promote discussion with policy makers and industry to explore ways to
achieve adequate retirement funding for all,” Mr Meller said.
Media release
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NATSEM author and University of Canberra Associate Professor Dr Simon Kelly said for women,
the time out of the labour force for childbirth and child-raising has a significant impact on their
personal savings and superannuation.
“We found a significant gender gap in personal savings and superannuation for women. Women
have sixth-tenths the personal savings of men and only have half the super of their male
counterparts,” Dr Kelly said.
“The baby boomers have not saved enough for their retirement. There is a significant gap between
their retirement expectations and their personal savings.
“Baby boomer women are particularly behind their male counterparts. Men aged 55 to 64 have on
average $130,900 in superannuation, while women of the same age have less than half that
amount, an average of $60,700,” Dr Kelly concluded.
Key findings
Happy birthday to the Age Pension
The Age Pension is 100 years old this year. In 1909 only 28 per cent (or 23,000) of people got the
Age Pension and now 77 per cent receive it (2.3 million). The low proportion receiving the pension,
28 per cent, appears to be a combination of strict criteria and the hard-working life resulting in the
poor being underrepresented in the over 65s.
We are living longer
In 1909 50 per cent of people died before reaching 65, if they did reach 65 they only lived about
another 10 years. Today 85 per cent of men and 92 per cent of women live until age 65 and can
expect to live another 20 years. More than 2.9 million people or 13.5 per cent of the Australian
population is now aged 65 and over. In 30 years time longer life expectancy could see around 7
million people aged 65 years and over putting greater pressure on the government and a greater
need for self-reliance.
Work participation rates drop for men
Work participation rates for men in the last 20 years are down 3.3 percentage points. However,
participation rates for men near retirement age, 60 to 64, has gone up, with almost six in 10 men
participating in the workforce, up 8.2 percentage points from two decades ago. Four in 10 men
leave the workforce before the traditional retirement age of 65 years. The female participation rate
has increased over the last 20 years, up 7.3 per cent. The participation rates are even stronger for
women aged 45 to 64 – the strongest growth over the last 20 years has been for women aged 55
to 59 years which is up 30.4 percentage points.
More Australians are working part-time
In 1966 only about 10 per cent of people worked part-time. Now, almost 30 per cent of Australians
work part-time. The proportion of men working part-time has more than doubled over the last 20
years from 7.6 per cent. As Australians are approaching the pension age, more than one-fifth of
men aged 60 to 64 and almost six in 10 women are transitioning to retirement by working part-time
–
yet those aged 55 to 59 are increasingly going back to full-time work.
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Male earnings peak at an earlier age than females
Men have higher average earnings and total incomes than women in all age groups. The overall
average earnings of men at $40,000 per annum is almost double the average for women at
$21,400. Male earnings are reasonably high and constant averaging over $55,000 from 35 to 54
years old while women peak at a much younger age of 25 to 34 at just $30,700.
Men have greater savings than women
Australians aged 55 to 64 are the wealthiest with average savings more than 20 times greater than
those who arrive into the labour force – $229,000 for men and $149,000 for women. The overall
personal savings for men is $132,200 and for women the average is $79,100. Family
responsibilities and motherhood impact on the personal savings for women, women have on
average six-tenths the personal savings of men. South Australian men have the highest average
level of personal savings at $152,600 while Tasmanian women have the lowest at $48,300.
Retirement savings only last a few years
The incomes of those currently aged 65 and over and retired ($23,200 for men and $18,900 for
women) do not seem to be high enough to finance the retirement expectations being expressed by
those approaching retirement. A person needs around 65 per cent of their pre-retirement income
for a comfortable retirement; a person who retires on average earnings would need $40,475 each
year. The savings of those currently aged 65 and over and retired ($107,500 for men and $81,600
for women) are only enough to last three years for women and four years for men.
Retirement in 30 years
Projecting 30 years forward and changing the SG to 12 per cent – for men the change will increase
their super by an estimated 25 per cent while for women, the increase varies with age. For those
aged 45-54, the projected increase is only 7 per cent; for those aged 55-64 it is 22 per cent; and for
women aged 65 and over, it is 30 per cent but the balance is still very low at $80,300. Women’s
superannuation balances are traditionally around half of the level of men at the same age.
Increasing the SG to 12 per cent would improve the average superannuation balances of women.
Increasing the SG would help Australians save for retirement.
This report is the 24th edition of the AMP.NATSEM Income and Wealth Reports. Since 2001, AMP
and NATSEM have produced a series of reports that open windows on Australian society, the way
we live and work - and our financial and personal aspirations. AMP publishes these reports to help
the community make informed financial and lifestyle decisions and to contribute to important social
and economic policy debate.
Note: for a full copy of the report please contact Emily Ritchie.
Media Enquiries
Emily Ritchie
Simon Kelly
AMP
NATSEM
Ph: 02 9257 5615
Ph: 07 5562 5582
Mob: 0407 287 256
Mob: 0420 325 035
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Appendix
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NEWS 
