Fear of Running Out: The Retirement Confidence Crisis

FORO – the fear of running out of money – is significantly impacting how Australians experience retirement, according to recent industry research.

The Retirement Income Review found that typical retirees die with around 90% of their starting superannuation balance intact. This creates what researchers call a "lifestyle deficit", where retirees forgo experiences and a higher standard of living despite having sufficient funds.

Research from Natixis Investment Managers shows 40% of Generation X Australians are worried about running out of money in retirement.

Confidence varies dramatically by income: only 40% of those earning under $45,000 feel confident about retirement, compared to 75% of those on $190,000 or more. Single mothers face the steepest confidence gap, with only 20% feeling secure about their retirement prospects.

Treasury's Retirement Income Review identified that 83% of accounts in the pension phase use account-based pensions that don't manage longevity risk. Many retirees rely on statutory minimum drawdown rates as a default strategy to avoid depleting their savings.

Association of Superannuation Funds of Australia research indicates only 51% of Australians have consulted any information source about preparing for retirement, suggesting widespread disengagement with retirement planning.