The topic of financial health is one that many Australians put off for another day. So much so that the number one financial regret of Australians is not prioritising their financial health earlier in life.
Most Australians do not have much saved up for a rainy day. More than half of Australians (53 per cent) have $5,000 or less in their savings account right now. For a fifth of Australians (22 per cent), their financial position is even more precarious with less than $100 in their savings account right now.
Given their limited savings, it is understandable that Australians are reliant on earning an income for survival. If they were to stop earning an income today and could not refinance or take out more loans, more than half of Australians (58 per cent) would run out of money within six months. For more than a third of Australians (36 per cent), however, the financial runway is much shorter, being likely to run out within a week or so.1
Are Australians financially ready for retirement?
In light of this, just one quarter of Australians (24 per cent) over the age of 18 feel extremely or very financially prepared for retirement. Positively, Australia’s oldest residents, Builders (40 per cent) and Baby Boomers (32 per cent) are the most likely to feel extremely or very financially prepared. Generation X, however, are the least likely to feel financially prepared at just 16 per cent. This is notable as the oldest of Gen X will be approaching retirement age by 2031.
Gen Z engaged with superannuation
The culture around preparing for retirement is likely to be shifting, with younger generations of Australians highly engaged with their superannuation. More than half of Generation Z (54 per cent) and two in five Gen Y (42 per cent) check the balance of their superannuation fund at least monthly. This compares to a third of Gen X (33 per cent) and Baby Boomers (31 per cent) and one in six Builders (17 per cent). This poses an important question for organisations; with a younger generation of Australians highly engaged with their superannuation and looking to prioritise their financial health earlier in life, how can organisations equip them to succeed?
The gender divide
Females are in a more precarious financial position than males, being more likely to have less than $100 in their savings account (26 per cent female vs 17 per cent male). Meanwhile, males are more likely to feel financially prepared for retirement, being almost twice as likely as females to feel extremely or very financially prepared (30 per cent vs 18 per cent). Males also have a higher engagement with their super, being more likely to check the balance of their superannuation at least monthly (45 per cent vs 29 per cent). For the future financial health of Australians, it is important for leaders and Australians to continue to take steps to reduce this gender gap.
Future financial outlook
Despite the financial challenges many Australians face, they are positive about their financial future. More than three in five Australians (63 per cent) believe they will be in a better financial position by 2031 than they are today.
1 Mainstreet Insights, Australia’s financial habits, July 2021
Article supplied with thanks to McCrindle.
About the author: McCrindle are a team of researchers and communications specialists who discover insights, and tell the story of Australians – what we do, and who we are.