Retirement plans of boomers not matched by reality

With older working Australians' super worth a median $125,000, they are unlikely to fulfill their dreams of helping out their children financially.

Almost three-quarters of the more than 1100 over-50s, but not yet retired, surveyed on behalf of industry fund REST, say they would like to help their adult children.

The baby boomers would like to help their children buy a house and have a holiday.

They would also like to help pay for the schooling of their grandchildren. At the top of their list is leaving their adult children with a "significant" inheritance.

However, when asked what type of retirement they were likely to be able to afford, just over half say they are expecting only a "modest" retirement.

A modest retirement is defined by the Association of Superannuation Funds of Australia (ASFA) retirement standard as a lifestyle that is certainly better than the age pension alone. However, it is one where the retiree is able to afford only basic activities.

A comfortable retirement is one where the retiree can afford private health insurance, a reasonable car, good clothes and a range of electronic equipment. They can also afford occasional international travel.

There is much debate over how much retirees will need to have saved to afford a comfortable retirement.

The latest ASFA figures show home-owning singles need a super balance of $545,000 to buy a comfortable retirement. That assumes they retire at age 65. Home-owning couples need $640,000.

These super balances assume retirees will draw a part-age pension and then draw the full age pension after their savings are substantially run-down.

The reality is that most over-50s are likely to fall a long way short of affording a comfortable retirement. The median value of older working Australians' super is about $125,000.

Most of the survey respondents say they would like to work to 67, but expect to work until 69 so that they can save more for their retirement and stay mentally and physically active.

About one-third of survey respondents said they expected to receive an inheritance to help them to fund their retirement.

They are expecting to inherit $250,000. However, survey respondents were asked to give the value of any inheritance they had already received. On average, the size of the inheritance was $110,000.

Damian Hill, the chief executive of REST, which covers retail sector workers, says that while wanting to help your children is laudable, retirement savings are "first and foremost" meant to fund workers' own retirements.

"Using retirement savings for other purposes may mean they become a financial burden on their own children later in life," Hill says.

Those aged over 50 have not had the benefit of superannuation contributions throughout their working lives, as compulsory super started in 1992.

Their children are likely to end up with more saved to fund their retirements than their parents.

Sydney Morning Herald