Australian pensioners face poverty, says AMP

By Emma Thelwell, ninemsn Money

Australians have saved enough money to last just three or four years into retirement, risking poverty in their old age, new research has shown.

AMP has called on the government to raise the super guarantee (SG) from 9 percent to 12 percent, after revealing that the average Australian is working less hours and living longer, but saving less money for retirement.

Craig Meller, of AMP financial services, said it was a critical issue that needs to be managed.

"Australians have very high retirement expectations but we are not saving enough to even afford a comfortable retirement let alone one that meets our expectations," he said.

By boosting the SG to 12 percent of annual earnings, the average superannuation balance could increase by a quarter.

With 85 percent of men and 92 percent of women now expected to live 20 years beyond the retirement age of 65, Mr Meller said the nation needs to raise the issue with policy makers.

Australians have cut back the amount of work they do, with almost six in 10 men leaving the workforce before the age of 65, AMP's report revealed.

Meanwhile, around 30 percent of Australians work part-time – up from just 10 percent in 1966.

The proportion of men working part-time has more than doubled over the last 20 years.

However, men have higher average earnings and total incomes than women in all age ranges, with average annual earnings of $40,000 – almost double the average for women at $21,400.

Dr Simon Kelly, a professor at Canberra University and author of the AMP.NATSEM Income and Wealth report, said for women the time out of the workforce for childbirth and raising kids has hit their savings hard.

"We found a significant gender gap in personal savings and superannuation for women. Women...only have half the super of their male counterparts," he said.

"Baby boomer women are particularly behind their male counterparts. Men aged 55 to 64 have on average $130,900 in superannuation, while women of the same age have less than half that amount, an average of $60,700."

AMP's research found that the savings of those retirees currently aged 65 and over - an average of $107,500 for men and $81,600 for women - are only enough to last three years for women and four years for men.

Those that retire on average earnings would need $40,475 each, per year, for a comfortable retirement, according to AMP.