About the study

As the Australian population ages, and "baby boomers" begin to retire, the issue of financial literacy in a retirement planning context has become particularly salient.

To address it, Mercer undertook a study to better understand working Australians' levels of financial literacy and how well prepared they are for retirement. Mercer also studied retirees (who have the benefit of hindsight) to share their thoughts on what working Australians could be doing today to improve their future for tomorrow.

Aims

The research sought to understand:

  1. How financially literate are working Australians in their understanding of super and retirement planning issues?
  2. What gap exists in current versus desired levels of knowledge about super and investments?
  3. What are working Australians doing today to prepare for retirement tomorrow?
  4. Whose responsibility is it to educate the public on issues relating to financial wellbeing? What role do employers, the government and individuals play?
  5. And among retirees, what do recent retirees know now that they wish they had known before they retired?

Methodology

To answer these questions, Mercer undertook a two stage research program:

  • A quantitative online survey among a random sample of 802 working Australians; and
  • Four focus groups among 39 recent retirees in Sydney and Melbourne ("Hindsight" focus groups).

Key findings

The problem

  • Many working Australians have given little thought to, or commenced preparations for, retirement.
  • Half anticipate they will be living a life in retirement that is, at best, 'less' comfortable than they are now. Many feel they will be 'a lot less' comfortable.
  • There is a heavy reliance on super to fund retirement.
  • Australians know little about their own super fund.
  • Working Australians admit their knowledge of retirement issues is generally poor and how they perform in a test confirms this self-assessment.
  • Mercer identified six 'types' to describe levels of financial literacy in Australian society.

Who is responsible?

  • Nearly all respondents felt they personally have some or all of the responsibility to prepare for their retirement. However, government and employers also play a role in providing knowledge to empower working Australians towards a happy retirement.
  • Financially literate employees are beneficial for employers.
  • Nearly half of the respondents claim that specific issues related to super will have an impact on their voting intentions.

What is the solution?

  • Australians are highly predisposed to seeking advice and attending education seminars.
  • The experiences of Australian retirees can assist younger generations.

 
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