AMP retirement adequacy index

The AMP retirement adequacy index helps to estimate whether Australians are on track for an acceptable retirement. We compared the savings of Australians against a target for what would be an adequate income in retirement.

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The retirement adequacy of working Australians was at its lowest level since the global financial crisis (GFC), falling almost 2 percentage points to 69.4 per cent, while projected retirement savings fell 7 per cent to $492,000, according to the latest AMP retirement adequacy index.

Superannuation was a major driver of these falls with the average worker's total superannuation contributions falling to the lowest level since the Index began in 2006—at 12.3 per cent of salary compared to 12.6 per cent as at 31 December 2006, mainly due to a fall in voluntary contribution rates.

The AMP retirement adequacy index used data for the six months from June 2011 to December 2011 from more than 280,000 AMP corporate superannuation customers to predict retirement adequacy based on 65 per cent of an individual's pre-retirement income. The data factors in the increase in the superannuation guarantee from 9 per cent to 12 per cent.

AMP Financial Services Managing Director Craig Meller said the drop in voluntary contributions, market volatility and ongoing subdued investor sentiment is impacting overall retirement adequacy and has the potential to adversely affect the future retirement lifestyles of Australians.

The latest edition of the biannual AMP retirement adequacy index shows superannuation balances are higher than peak 2007 levels for the first time, increasing 11.4 per cent from $40,132 to $44,690.

The AMP retirement adequacy index used data for the six months to June 2010 from more than 328,000 AMP corporate superannuation customers.

While overall super balances are up, reflecting a stronger economy and higher investment returns, superannuation contributions are still below 2007 levels at 12.5 per cent, compared to 13 per cent in December 2007.

A drop in discretionary contribution rates via salary sacrifice, which are at their lowest levels since the index began, contributed to this fall. The biggest falls in discretionary contributions were seen in the 45–49 and 50–54 age groups, which dropped 1 per cent (to 1.7 per cent) and 1.8 per cent (to 3.3 per cent) respectively.

The Federal Government's decision to increase the super guarantee (SG) to 12% will have a significant impact on retirement adequacy for the average Australian, lifting levels by $46,000 or 2.8 per cent to 71.3 per cent, according to the latest AMP retirement adequacy index.

The SG increase to 12 per cent will also boost the average annual net retirement income by $1,574 to $45,710.

The children of today's workers will reap the greatest benefits with their retirement adequacy expected to be around 75% of their income—10% more than the current 65 per cent benchmark.

Factoring in an increase to the SG to 12 per cent, the index reveals 20 to 24-year-olds will benefit the most and are projected to have an extra $107,535 in assets in today's dollars when they retire.

The latest edition of the bi-annual AMP retirement adequacy index shows that while stock market improvements have boosted overall retirement adequacy for most Australians for the first time since June 2007, over 40 per cent of the working population is still falling behind in terms of providing for a comfortable retirement.

In the six months to June 2009 super balances rose on average by 6.9 per cent per member, reflecting improvements in the Australian sharemarket. Super balances have now regained close to half of the losses seen over the course of 2008.

The AMP retirement adequacy index used data for the six months to June 2009 from 322,000 AMP corporate superannuation clients to predict retirement adequacy based on 65 per cent of an individual's pre-retirement living standards.

The latest edition of the bi-annual AMP superannuation adequacy index shows surprising results that adequacy has improved marginally despite the global financial crisis (GFC).

While the data shows investment market turmoil in the second half of 2008 contributed to an average fall in super balances of 6.5 per cent per member, or $2,782, average total contribution rates held ground at 12.5 per cent, reflecting members maintaining a long-term approach in the second half of 2008.

The AMP superannuation index used data for the six months to June 2008 from 322,000 AMP corporate superannuation clients to predict retirement adequacy based on 65 per cent of an individual's pre-retirement living standards.

The latest edition of the bi-annual AMP superannuation adequacy index shows that Australians are expected to retire on an annual average income of $41,992 in today's dollars—$25 a week or three per cent less than for the previous December 2007 index.

Almost four million Australians (or 37 per cent of the workforce) are falling behind what they need for an adequate retirement—a seven per cent increase on the previous Index.

The AMP superannuation index used data for the six months to June 2008 from 322,000 AMP corporate superannuation clients to predict retirement adequacy based on 65 per cent of an individual's pre-retirement living standards.