.... on the asset pool over the next 20 years, however, more than a $1 trillion would be added if Australians worked longer and retired at age 70, according to a new report.

The report also found that the number of self-funded retirees will need to dramatically increase in order to meet the government’s mounting Age Pension and other social security commitments.

Deloitte’s sixth biennial report, The Dynamics of the Australian Superannuation System 2013-2033, forecasts that Australia’s superannuation asset pool will grow from $1.6 trillion to $4 trillion in the next decade, and will reach $7.6 trillion by 2033, representing 180 per cent of GDP.

Australians can take steps to improve their position through actions such as increasing contributions or delaying retirement, but these options are not available to all and they do not fully eliminate the longevity risk.” Wayne Walker

Deloitte Actuaries and Consultants partner, Wayne Walker, said the total pool could rise to $8.6 trillion if Australians worked five years longer and today’s average 65-year-old will not have enough superannuation for a fully self-funded retirement given that life expectancy is increasing.

“Many Australians now approaching retirement have only received super for a limited portion of their working lives as our system is still maturing,” he said.

However, younger Australians, who will have been contributing the compulsory super guarantee for a much longer, will have $1.1 million in future dollar terms at age 65 in 2048, assuming a salary of $60,000 and a current account balance of $27,000.

This amount is expected to deliver a “modest” standard of living to age 94 and a “comfortable retirement” only until age 77, Deloitte found.

The report found there are currently four working Australians per retiree, however, over the next 20 years that will fall to less than three. This will intensify the burden on the public purse.

“Australians can take steps to improve their position through actions such as increasing contributions or delaying retirement, but these options are not available to all and they do not fully eliminate the longevity risk,” Walker said.

24/09/2013
Leng Yeow
Source:  Professional Planner    www.professionalplanner.com.au