Record high inflation and extortionate money management costs can wipe 11 years of retirement savings

With the cost-of-living and inflation at all-time highs, new findings from wealth manager Netwealth show how an alarming 11 years of retirement savings can be lost through the extortionate costs of money management, highlighting the destructive power of combined inflation and high fees on pensions.

Less than two thirds of pre-retirees (65%) are looking forward to their own retirement – perhaps as only half (50%) feel financially prepared.

Financial security ranks as the top indicator of a ‘successful’ retirement with 56% in agreement, more than a healthy lifestyle (54%), freedom and flexibility to travel (50%), or developing close and meaningful relationships with loved ones (36%).

This pressure to prepare financially has resulted in 50% doing their due diligence to form a clear idea of how much money will be needed to live in comfort. Meanwhile, only one in five (20%) are working with an advisor, while 16% plan to work with one within the next 12 months.

Although many recognise that forward looking financial planning, such as starting pension contributions early, is key to a successful retirement, more than a third (38%) feel that they should have started saving for retirement in their 20s – rising to 42% of those who have retired – with only 39% factoring in the money needed to pursue later dreams and ambitions, and even fewer (36%) considering end-of-life care.

Commenting, Charlotte Ransom, CEO of Netwealth, said: “With life expectancy increasing, the need for thorough and flexible retirement planning is now more crucial than ever before. Retirement is an exciting phase of life, marked by increased freedom and the ability to pursue our passions and take on new challenges. However, in order to achieve a happy, successful retirement, we must prepare ahead of time.

“Work with a financial planner early on to identify the type of retirement you want and the steps you need to take to get there, use online planning tools to help bring your plans to life, and ensure you take a holistic approach centred on your goals and ambitions for this phase of life, rather than focusing solely on investment returns which may or may not be achieved. While inflation and the cost of living are at all-time highs, steps can be taken to safeguard savings and we can control some of the variables. If you save in fees, you can offset partially, if not totally, the negative effect of inflation on your investments over time.”


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