Data from the Australian Bureau of Statistics (ABS) is indicating that retirees still prefer income over lump sum payments of their superannuation.
A while ago there were fears that retirees were jumping into lump sums, but after a bit of research by the Productivity Commission, it turned out not to be true: very few retirees actually opt for a lump sum, and those who do usually have low balances anyway, and use it to pay down debt. The idea of the frivolous retiree wasting all their money going on wild holidays, then relying on the age pension and welfare systems, just wasn't the case.
New analysis shows this trend is increasing as more Australians actually have superannuation to draw on. Around 1.2 million people were receiving an income stream from super in 2013-14, with an average of $502 per week.
Out of that 1.2 million, three-quarters were over 65 years of age, and a quarter were between 55 and 64. The outcome is that one in four people aged over 65 (excluding those in nursing and retirement homes) were receiving a superannuation income stream, up from one in five in 2003-04.
In 2013-14, 420,000 people said they had withdrawn a lump sum from their super in the past two years, with half being for amounts less than $25,000. This lump sum was used, in most cases, to invest in the family home, make other investments, buy or pay off a vehicle, or pay off outstanding debt. The other quarter withdrew money for a holiday, general living expenses, or medical expenses.
Other key findings include:
- In 2003-04, 64 per cent of people over age 15 had superannuation
- In 2013-14, this had risen to 71 per cent, with 85 per cent of those aged 25-54 having superannuation
- For those with superannuation, the average of their accounts increase in real terms from $68,000 to $110,000.