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Media Release 1-08-2005
Citibank Retirement Index offers a retirement lesson for "GEN NEXT" as current retirees reveal regrets and home truths
Around one in two retirees claim you need as much income - if not more in retirement
940,000 (30%) are not confident their retirement savings will last the distance
Almost half of over 65s (900,000) rely solely on the age pension as their main source of retirement income
Two in three people aged 55+ plan to do some type of work in retirement
Around one in three over 65s didn't seriously start saving for retirement until age 55
1.3 million retirees wish they'd started saving earlier for retirement
Sydney, 1 August 2005: Launched today, the Citibank Retirement Index provides a further wake-up call for millions of Australians by revealing that the lives of today's retirees are showered with regrets and underpinned by the worry that their retirement savings won't enable them to meet their financial commitments and lead a comfortable life throughout retirement.
Commissioned by Citibank, the research was conducted by Newspoll amongst 325 semi and fully retired people aged 55 and over with the aim of producing a comprehensive snapshot of retirement, which is tracked every six months. The startling results of the initial research paint a clear picture of retirement in today's terms and offers a powerful learning tool for future generations of retirees.
The launch of the Citibank Retirement Index has been timed to coincide with the opening of the new CitiGold wealth management centre, in the heart of Sydney's CBD, and the introduction of their Wealth Creation seminar series - both aimed at getting people actively involved in creating wealth for their retirement instead of sitting on the fence.
Suvrat Saigal, Director of CitiGold said: "The findings of the Citibank Retirement Index reinforce the need for increased financial education and awareness amongst consumers - there is a lot of work being done in this area, but the message continues to be lost on most people. A large number of the retirees we spoke to seem to feel apathetic or powerless and resigned to their fate. We need to help them get out of this mind-set and encourage them to take control. If the results of this research aren't a giant wake-up call, I don't know what is."
Full-time retirement becoming a thing of the past
For those aged 55-64, retirement isn't even on the horizon, let alone something to look forward to; 33 per cent don't know when they will retire, 28 per cent don't actually plan to retire at all and around one in ten (11%) plan to hang up their boots after they hit 70.
Despite their intentions to opt out of the workforce altogether, the likelihood for two out of three older Australians, is that they will return to work in one form or another during their 'golden years'. Extra cash may play a key consideration for half of the people returning to work, but social factors seem to be the main drawcard. The research suggests people work in retirement for personal reasons first (to give them a sense of purpose) and financial reasons second - indicating that retirees have a strong motivation to stay in the workforce.
RAG "retirement" status - the confidence factor at play
Financial confidence is the magical anecdote in this research and has been identified as the pivotal factor of the entire survey. It can be likened to an early warning system for retirement. A red, amber or green (RAG) status can be used to indicate whether retirees are confident their level of savings will fund a comfortable retirement.
'Green' shows financial confidence and being on track with retirement savings. 'Red' should get the alarm bells ringing - a red status means that retirees are not confident they have enough to live on comfortably in retirement and face a definite shortfall. 'Amber' is somewhere in between. Without urgent action, this group could move either way - the big risk is they fall into the red camp. The challenge is to move this group up into 'greener' pastures.
The Citibank Retirement Index suggests that the 'greens' tend to have a tertiary education and are higher income earners - they are confident they have enough to live on comfortably in retirement. Around four in five (78%) of this group started saving for retirement before the age of forty, giving them a great head start.
In contrast, the 'reds' don't think they have enough savings to get by on and approach retirement with an unsettling mixture of regret and resignation. Around one in three (30%) of total respondents fall into this category, rising to 42 per cent of 55-64 year olds.
One in five 'reds' aged 55-64 haven't even started saving for retirement and over forty per cent either already rely on the age pension or intend doing so. Worryingly, the majority of this group have no 'plan b' - no secondary source of income apart from government social security.
Highlighting the disparity between the genders, only 29 per cent of women surveyed were 'very confident' about their level of savings to fund retirement compared to 43 per cent of men.
As 'financial confidence' is integral to this survey, the Citibank Retirement Index will track this measure six monthly, and report changes as further waves of research are conducted. It will start at a base of 100.
Supplementing retirement income
Almost half of retirees (45%) claim they need the same amount of income - if not more in retirement, than they earned while working. But considering around one in three over 65s didn't take serious steps to save for their retirement until the age of 55, where will this money come from? In some cases this has only allowed as little as five years to generate retirement capital which may need to last up to twenty five years - the result is a huge savings gap and an inability to live the retirement they wanted.
When faced with the need to supplement their income, sadly 153,000 retirees (5%) are too proud to ask for help from friends/family indicating they would consider breaking the law instead to make ends meet. On the other hand, 36% are greytxt to do nothing, perhaps resigned to their fate.
Steps taken to supplement retirement income
Rearranged savings or investments 43%
Returned to work 25%
Sold home or investment property 14%
Borrowed against equity in home 5%
Considered bending the rules or breaking the law 5%
Borrowed money from family friends 4%
Further signs that today's retirees are struggling financially show more than half of over 65s (around one million) live on a household income of less than $30,000, over 900,000 (54%) of them depend on the age pension as their main source of retirement income and over 500,000 (29%) retirees don't have a secondary source of income.
Andrew de Vries Head of Investments at Citibank says: "When it comes to supplementing retirement income, one of the first places to start is by reviewing and re-arranging your current investments and wealth accumulation strategies. The investment environment is constantly changing, asset prices rise and fall, laws change, opportunities arise and new products are being developed regularly - your retirement portfolio, no matter how basic should be reviewed regularly. Less than half the retirees surveyed have done this - only 43% in fact which is a huge concern. Whether it's apathy or lack of education - they could be short-changing themselves significantly."
In hindsight...
In hindsight, many retirees surveyed would have done things differently. The research revealed differences between the sexes and age groups but overall the top retirement regrets are:
  • Started saving for retirement earlier (41%)
  • Exercised more (37%)
  • Done more financial planning/sought expert advice (32%)
  • Retired later (29%)
  • Taken better care of health (28%)
  • Moved closer to family (8%)
  • Retired sooner (6%)
Financial confidence again comes into play here with the 'reds' not surprisingly having a much higher instance of regret.
Confident about level of savings to fund retirement 'GREENS' Not confident about level of savings to fund retirement 'REDS'
Started saving for retirement earlier 34% 57%
Done more financial planning 26% 44%
Taken better care of health 20% 46%
Retired later 18% 34%
Commenting on these results Mr de Vries said: "The merits of building a nest egg from an early age are plain to see. Our research shows that half of the retirees who started saving before forty already rely on their super, or intend to do so. On the other hand, those who didn't kick-start their savings until after fifty will be relying on the pension to fund their retirement. It's the difference between being able to be financially independent or not."
The power of hindsight was also shown in that of the 1.3 million or so retirees aged 55+ who wished they'd started saving sooner, 45% think that 20 years earlier would have been the right starting point, and a further 17% think more than 16 years earlier would have done the trick. And tellingly, of those who didn't start saving until after fifty, 55 per cent wish they had an extra 20 years head start - it would have made a startling difference to their quality of retirement.
Mr de Vries continued: "In today's retirement climate, no one has the luxury to say 'I'll worry about that later' or 'she'll be right mate'. They are kidding themselves if they do. Particularly for generation x and generation y - time is still on your side and you can benefit from the experiences of the current crop of retirees.
"There are certain steps everyone should be taking - there are really no excuses anymore. Get interested, get educated and get activated. Government and industry efforts around improving the financial literacy of Australians are underway, but people also need to take steps to help themselves. Information and help is available, you just need to ask."
Further information on CitiGold is available at www.citibank.com.au or by phoning 1800 168 168. To enquire about Citibank's free Wealth Creation seminars phone (02) 8225 3290.
Further results - Part B to follow
These results only scratch the surface of what the Citibank Retirement Index has uncovered. Further information and a full report will be released on August 16 at a luncheon event. To register your interest in attending this event, email or phone Leila Dean on the details below.
Media enquiries:
Leila Dean: T: (02) 8225 1658, M: 0404 509 894, leila.dean@citigroup.com
Anita Fu: T: (02) 8225 1631, M: 0401 862 986, anita1.fu@citigroup.com
Note to editors:
1. Research conducted by Newspoll amongst a representative sample of 325 "self-described" semi and fully retired Australian adults 55 years of age or older between 3 - 5 May 2005.
2. Population figures are based on projected 2005 ABS data:
55 - 64 years 2,180,052
65 years and older 2,656,341
Total 55+ 4,836,393
3. About CitiGold
CitiGold is Citibank's wealth management service aimed at affluent customers who hold balances of A$100,000 (or equivalent) with Citibank. CitiGold Centres provide customers with a range of superior products designed to maximise wealth creation.
Customers are serviced by personal CitiGold Financial Consultants who have the complete investment planning resources of Citigroup, the world's largest financial institution, behind them. Financial Consultants provide customised advice and expertise, gathering and co-ordinating advice locally and from across the globe.
Services include local currency investments, foreign currency products including dual currency deposit, structured products, managed funds, superannuation, retirement income products, personal insurance, mortgages, credit cards and more.
Citigroup (NYSE: C), the preeminent global financial services company with some 200 million customer accounts in more than 100 countries, provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage, and asset management. Major brand names under Citigroup's trademark red umbrella include Citibank, CitiFinancial, Primerica, Smith Barney and Banamex. Additional information may be found at: www.citigroup.com