Australian retirees, who are typically in their mid-60s and above, enjoy that time of respite that comes after a life of work. These people enjoying their retirement are under the federal age pension of the country which got implemented in 1909. Retirees aged 65 years old and older have been eligible to receive a pension. Today, Australians are living longer, and their life expectancy can reach 80 years old. As the coronavirus or COVID-19 crisis carries on impacting the country and its people, several concerned institutions have taken measures to assist the senior citizens with their retirement income.
General Australian Retirement Terrain in 2020
The 2019 Melbourne Mercer Global Pension Index (MMGPI) indicated that the retirement income system of Australia compares favourably with the world’s best pension systems. The largest nation in Oceania ranks third out of the 37 countries surveyed. The MMGPI grades pension systems based on integrity, adequacy, and sustainability. Its 2019 study confirmed that Australia is merely behind Denmark and The Netherlands. These two European countries were on top of the annual rankings and obtained an A-grade.
Brendan Coates supported the findings of the MMGPI. He agreed that, in Australia, the pension or retirement incomes are more than sufficient for most retirees at present and in the foreseeable future. Moreover, the Grattan Institute economist pointed out in early 2020 that the Australian retirement income system is serving the nation’s senior citizens well. Coates added that, compared to most of the First World territories, the Australian arrangement delivers enough pension to most older adults at a lower budgetary price.
Furthermore, the program director of Household Finances at the Grattan Institute affirmed that 21st-century Australian retirees are wealthier compared to any previous generation. He explained that every generation gets a higher lifetime income compared to their predecessors. It is because of their greater participation in the economy and the rise in productivity. Coates said that today’s pensioners earned and saved more, as well as retired with more income than their parents. He remarked that, therefore, these people’s pensions are worth more to them.
Besides, Coates cited that, aside from the sizable nest eggs of today’s pensioners, these retirees enjoy lower costs of living due to the modern perks like discounts on pharmaceuticals, council rates, and gas bills. Plus, he relayed that senior citizens benefit from rebates in electricity and motor vehicle registrations. With these contemporary realities, Coates shared that the expectations of retirement had undergone modifications. Overseas travel and yoga are fashionable, while chintz sofas and baked beans are not anymore.
Overall, the retirees today encounter the lowest levels of financial pressure than any age bracket as well. Merely four per cent of senior citizen-aged homeowners encounter financial stress. The latter is an adverse emotional and mental condition. Due to insufficient money, people who experience financial stress typically struggle with obtaining heat for their houses, bills payment, and getting adequate meals.
The overall climate of the Australian retirement system paints a positive picture, as per the recent observations above. However, because of the on-going coronavirus crisis, as of June 2020, pensioners have voiced out their concerns. They mainly worry about their long-term financial security which they view as at risk because of the current international healthcare emergency.
Effects of the Coronavirus Pandemic to Senior Citizens
Ian Morris is an Australian citizen who has been retired for five years. His present financial situation paints a general picture of older Australians who are feeling the pangs of economic insecurity due to the coronavirus crisis. Morris confirmed that the pandemic’s repercussion on the share market had led to his savings plummeting by eight per cent. He said that this figure is worth approximately one year and a half of his spending funds.
Also, the pensioner remarked that senior citizens like himself had to be more vigilant and frugal with luxuries, such as going on holidays or dining in restaurants. Morris confirmed that he would have to spread his limited financial resources further over time due to the COVID-19 crisis. With this reality, the retired citizen relayed that he had felt uncertain and less secure about his long-term financial well-being.
During the height of the COVID-19 pandemic in early 2020, Challenger commissioned a poll involving more than 1,000 Australians who are 40 years old and above as participants. The researchers from the investment management company obtained the following findings. The results demonstrated the Australian pensioners’ coronavirus-induced worries over their financial future:
A) 65 per cent of the retirees confirmed that they felt worried about their income in retirement.
B) 57 per cent cited that they intend to make modifications to their finances.
C) Nearly half, or 49 per cent of the retired Australians, said they do not feel a sense of assurance in terms of their financial security in the next five years.
D) Over one-third or 37 per cent were decreasing their spending on accessories and clothes.
E) More than one quarter, or 27 per cent of retirees, were cutting back on their food shopping costs.
F) One in five, or 20 per cent, of the respondents, are aiming to boost their savings balance.
G) One in twenty, or 6 per cent, intends to cut holiday and travel plans.
Angela Murphy remarked that the results of Challenger’s study exhibited the COVID-19 pandemic’s repercussion on the Australian economy and the financial and mental well-being of the citizens. She relayed that, because of feelings of uncertainties about the future, plenty of retirees, unfortunately, had cut back on necessities like energy bills and food. Murphy said that the immediate healthcare threat had placed pension or retirement income in the spotlight, too.
Plenty of older citizens doubt the confidence they previously possessed about their financial circumstances. These retirees are also questioning the current crisis’s impact on their retirement plans over the longer term, the distribution, product, and marketing head of Challenger said. With this pessimism shrouding the pensioners, some groups in the country have stepped in to extend their assistance.
Australian Groups Aid Pensioners Amid COVID-19 Crisis
Australian retirees are living longer lives. An increasing number of them who are over 50 years old are seeking employment. In May 2020, the Australian Bureau of Statistics (ABS) released significant figures. These pieces of data indicated that senior citizens, who are 70 years old and above, had faced a 13.9-per cent nosedive in employment figures. The ABS statistics confirmed that the elderly are the second age bracket which the coronavirus pandemic had hit the hardest.
These retirees are behind the young generation, aged 20 years old and below, who experienced an 18.5-per cent drop in employment statistics. With the situations that involve retirees struggling financially because the COVID-19 pandemic did not spare them from its devastating impacts, some groups like the following three organisations have implemented some helpful measures:
1. IOOF Holdings Limited
This Australian financial services firm provides a range of services and products to their clients. Their offerings comprise trustee services, financial advice, investment management, and superannuation. IOOF Holdings Limited is among the companies that have indicated their interest to help retirees amid the coronavirus pandemic. The company had already eliminated license charges for financial advisers dispensing pro bono work. Also, the pensioners could get connected with financial offerings suitable for them, like annuities. With these financial products, the elderly would receive income for life. Annuities are a kind of funding obtained in return for a lump-sum investment.
2. Super Consumers
This Australian consumer advocacy organisation wants to help the senior citizens in managing their money better amid the coronavirus crisis. Thus, in May 2020, the group filed a submission to the Government of Australia’s consumer information rights inquiry. Super Consumers desires superannuation funds to have a higher level of data access to gather and share information with registered companies. Pensioners will benefit as more innovative enterprise models would emerge.
Also, budgeting or income results could get maximised with Super Consumers’ push for sharing of consumer lifestyle, wellness, and banking data with financial advisers. Xavier O’Halloran is the director of the consumer advocacy group. He remarked that their proposition is a game-changer because it would facilitate data-gathering from other sources. Plus, O’Halloran pointed out that people would, therefore, be able to plan for their retirement in a much better manner.
Challenger offers a wide array of products to assist their customers by the time they retire. It is an Australian firm that is the largest provider of annuities. Its thousands of clients get the service of guaranteed income. As the coronavirus pandemic is underway, Challenger has launched the Retire with Confidence Tool. The company affirmed that this solution aims to aid Australians aged 60 to 80 years old in their retirement. The clients will comprehend how long their pension might last through the tool.
Also, Challenger’s offering will help retirees grasp the amount of Age Pension for which they may have the eligibility. The Retire with Confidence Tool presents how the inclusion of assorted kinds of investments and income sources could develop the senior citizens’ financial outcomes as well.
Without the right financial advice, retirees struggle in safeguarding their retirement income from the adverse impacts of the COVID-19 pandemic. Also, they tend to draw down from their lump sum, hoping to see them through. Therefore, these senior citizens certainly deserve assistance from several concerned institutions that have expressed their intent to help. These groups have these retirees as their top-of-mind concerns. They believe that the elderly population deserve aid after being of significant service to Australia for a long time.
Although the Government of Australia had already performed the necessary measures to assist the older members of the society, the once-in-a-lifetime pandemic may have prevented it from attending to the needs of these pensioners completely. Hence, the stepping-in action of independent organisations is a massive help. These firms desire the elderly members of the society to relish their retirement years, overcoming the coronavirus crisis without the potential financial worries.