Approximately 2.5 million Australians are projected to transition to life after full-time work (aka the retirement phase) within the next ten years, with 710,000 intending to retire in the next five years alone. For an industry managing $4.5 trillion in retirement savings, understanding these members is essential.
Four major research reports released in recent months provide unprecedented insight. The HILDA Survey, Vanguard's How Australia Retires, AMP's Retirement Confidence Pulse, and Impact Economics' analysis for the Superannuation Members Council collectively surveyed more than 5,800 Australians and analysed 23 years of longitudinal data. Their findings reveal that despite unprecedented wealth accumulation, Australia faces a retirement confidence crisis shaped by inadequate planning, crumbling housing assumptions and systemic gender inequalities.
The Confidence Paradox
Only half of Australians feel financially confident about their retirement. AMP Chief Executive Alexis George describes this as a "national wake-up call," noting that "despite national wealth, a maturing super system and growing balances, too many don't have financial peace of mind about their retirement."
The sentiment gap between current retirees and those approaching retirement is stark. 65% of current retirees describe themselves as confident and secure, whilst only 43% of working-age Australians share this outlook. The inverse tells an equally concerning story: 36% of working-age Australians report feeling anxious or worried, compared to just 19% of retirees.
This suggests a fundamental disconnect between superannuation system outcomes and member perceptions. The wealth exists, but the confidence doesn't. Understanding why requires examining three interconnected factors reshaping the retirement landscape.
The planning gap
Retirement planning emerges as the single most influential factor in determining confidence, yet nearly half of working-age Australians have no plan for how they will retire. Among those aged 55 to 64 who are still working, only 29% describe themselves as well-planned. Perhaps most concerning, 38% of current retirees report they had no plan when they retired.
The planning effect manifests most clearly in retirement timing expectations. Working-age Australians with no plan face a gap of 9.7 years between their ideal retirement age and when they realistically expect to retire. For those with a detailed plan, this gap shrinks to just 0.3 years. Current retirees who had a clear plan were three times more likely to feel highly confident about funding their lifestyle and 65% more likely to maintain a positive outlook overall.
Whilst there is clear evidence about the value of advice, many Australians can't access or afford traditional financial advice. As the Actuaries Institute points out in a recent discussion paper, we need a new framework that distinguishes between simple help, general guidance and comprehensive advice.
Yet planning alone cannot solve all challenges facing Australian retirees. Even meticulous planning can be undermined by structural shifts that are redefining what retirement looks like and what it costs.
When housing assumptions break down
The Australian retirement income system has long operated on an implicit assumption that retirees will own their homes outright. This assumption underpins everything from Age Pension adequacy calculations to superannuation withdrawal strategies and retirement income benchmarks. It's breaking down rapidly.
More than one in three Millennials now expect to carry mortgage debt into retirement, along with one in four Baby Boomers. This contrasts sharply with current retirees, only 8% of whom are still paying off a mortgage. The impact on confidence is severe, with 48% of retirees with a mortgage reporting low confidence, compared with 28% of all retirees.
At the same time, outright homeownership has fallen from 75% to 66% between 2003 and 2023, whilst the proportion of retirees renting privately has doubled. Declining homeownership rates amongst younger cohorts suggest this trend will accelerate substantially over coming decades.
Renters face acute financial pressure in retirement, spending approximately 40% of their total household expenditure on housing. Nearly 60% of older renters live below the poverty line. Whilst the Age Pension provides adequate support for homeowners, it leaves the typical single renter 23% below the poverty line even with Commonwealth Rent Assistance.
The housing crisis also intersects with changing income expectations. Australians under 45 estimate they will need household income of $100,000 per year in retirement, with those aged 25 to 34 expecting $106,000 annually, which is a 59% increase in expectations since 2023. The reality is quite different. Current retiree couples report actually spending an average of $55,000 per year, whilst the ASFA Comfortable Lifestyle benchmark sits at $73,077 for couples who own their home outright.
Traditional retirement income strategies assume housing security. They will not serve the growing proportion of members who will be renting or carrying mortgage debt into retirement.
The gender dimension
The confidence crisis and housing divide don't affect all Australians equally. Women face systemic disadvantages across every dimension of retirement readiness that compound these existing challenges.
Only 41% of women feel confident about retirement compared to 59% of men. This confidence gap is underpinned by persistent superannuation disparities—women aged 60 to 64 hold median balances 25% lower than men, with the gap peaking at 32% for those aged 50 to 54. Women receive on average $1,081 less in employer contributions each year.
But the superannuation gap tells only part of the story. Life events between ages 45 and 65, a critical window for final retirement preparation, function as financial shocks that disproportionately derail women's retirement preparation.
Women are three times more likely than men to become primary caregivers between ages 45 and 65. This responsibility, whether caring for ageing parents, sick partners, or family members with disabilities, dramatically reduces their ability to participate in paid work. The reduction in earnings can be as large as $40,000 per year, with corresponding impacts on superannuation accumulation precisely when they should be building final retirement savings.
The financial impact of other life events is equally stark. A woman forced to stop working at age 50 due to family violence can expect to have $94,700 less in superannuation by age 67. Reducing to part-time work from age 50 due to health or caring responsibilities can cost $81,000 in retirement savings.
Divorce at age 50 leaves separated women aged 60 to 69 with median superannuation balances 38% lower than their partnered peers. Whilst men's economic security is often relatively unaffected by separation, women face heightened risk of poverty, particularly if they do not re-partner. Over a quarter of women have experienced violence from a partner or family member, with financial abuse affecting 16% of women and creating lasting economic harm that extends well into retirement.
The vulnerability is most acute for specific groups. Single mothers in their 40s register just 19% confidence, which is the lowest of any demographic measured. These women face the perfect storm of lower superannuation balances, ongoing dependent care responsibilities, reduced workforce participation, and limited time to recover financially before retirement. Divorced women report 33% confidence compared to 53% of divorced men, a 20-percentage-point gap that reflects fundamentally different economic outcomes from the same life event.
What this means for funds
This research reveals a retirement system delivering divergent outcomes that require different responses from the industry.
For many Australians, particularly homeowners with adequate superannuation balances, the system has worked remarkably well. The $4.5 trillion accumulation represents genuine wealth creation that has transformed retirement security for millions. Yet the confidence paradox persists even amongst this cohort, driven largely by a planning gap that leaves members anxious despite having sufficient resources.
For this group, the solution is relatively straightforward. The planning gap is both concerning and actionable. 86% of working-age Australians believe it's important for their fund to provide guidance up to and through retirement. The evidence shows that planning delivers transformative outcomes, turning anxiety into confidence without requiring additional wealth.
The expectations gap amongst younger Australians, expecting nearly double what current retirees actually spend, similarly drives anxiety that outpaces genuine need. Education delivered well before retirement could materially improve retirement literacy and, in turn, confidence and planning outcomes for those on track to achieve security.
However, other groups face challenges that planning and education alone cannot solve.
One in three Millennials expecting to carry mortgage debt into retirement, 12% of current retirees already renting, and systematic gender gaps affecting half the population represent structural features of the retirement landscape, not anomalies. These aren't edge cases requiring minor adjustments to existing frameworks.
The question facing funds and policymakers is whether strategies designed for outright homeowners can adapt to adequately serve renters, whether accumulation-focused approaches can deliver appropriate decumulation outcomes for those with mortgage debt, and whether gender-neutral product design can address systemic inequalities that manifest most acutely in the final critical years before retirement.
The Australian superannuation system has succeeded brilliantly at what it was designed to do: accumulate wealth during working lives. The challenge ahead is recognising that different member cohorts now require fundamentally different solutions. For some, the answer lies in better communication and planning support to unlock the confidence their balances should deliver. For others, the anxiety reflects structural realities that demand genuine innovation in how we think about retirement adequacy in a changing Australia.
The $4.5 trillion provides the resources. Whether the industry can deploy them effectively for all members, not just those who fit traditional assumptions, will determine whether Australia's retirement system continues to be regarded as world-class or becomes a tale of two retirements.
Stephen Huppert is Head of Engagement at Optimum Pensions. This article is intended to provide information and not advice. It should not be relied upon as advice or take the place of professional advice. It contains generic content and has been prepared without taking into account an individual’s personal objectives, financial situation or needs.