The survey by Challenger has shown that almost half (49 per cent) of retirees do not feel confident about their financial security during the next five years.
In light of the pandemic, almost all adults (97 per cent) questioned, aged 40 and over, were concerned about the Australian economy, more so than their own health and wellbeing (81 per cent).
Amid dampened employment reports, three-quarters of people surveyed said they were worried about their family or friends’ job status (77 per cent).
Challenger chief executive of distribution, product and marketing, Angela Murphy said the results show the impact of COVID-19 on the economy has affected the mental and financial wellbeing of Australians.
“Sixty-five per cent of retirees are concerned about their income during retirement and 57 per cent said they plan to make changes to their finances,” Ms Murphy said.
“Due to feeling uncertain about the future, unfortunately for many this means they are cutting back on necessities like food and energy bills.”
Both retirees and non-retirees reported they are analysing their everyday spending to alleviate financial stress. Those who are making changes are focusing on reducing expenditure on clothes and accessories (46 per cent), making changes to energy bills (12 per cent) and amending insurance plans (9 per cent).
More than a quarter (27 per cent) of retirees were said to be reducing their food shopping expenses and more than a third (37 per cent) are spending less on clothes due to concerns about what the coronavirus crisis may mean for their future finances.
Around one in 20 (6 per cent) of retirees signalled they are planning on cutting out travel and holidays.
But despite the shared anxieties, only half of all respondents (both retirees and non-retirees) have taken or are planning to take action to address their financial concerns.
Of those who expressed worries around their financial wellbeing, nearly a third of respondents (29 per cent) indicated they hadn’t done anything to alleviate their concern about their financial security.
Ms Murphy said of the 29 per cent who took action, one in five of those individuals consulted with a financial adviser.
“We know from our previous research in this area that when people feel overwhelmed by their financial situation they tend to stagnate because they find the choices too complex or they simply don’t know how to take the first step,” she said.
“The coronavirus pandemic has put retirement income in the spotlight and many older Australians are evidently questioning the confidence they previously had about their financial situation and what this might mean for their retirement plans over the longer-term.”
Challenger recently launched an online tool, Retire with Confidence, aiming to educate consumers on their retirement income options – by calculating how long their retirement income might last and how much of the age pension they may be eligible for as well as showing different types of investments and sources of income.
“Planning for retirement can be complex with a range of risks and options to consider,” Ms Murphy said.
“We hope this tool [helps build] confidence and understanding about income options in retirement for retirees.”
