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Young people’s financial stress discourages super engagement
More than half of young people aged 18–34 are already worried about having enough super to retire, despite being decades away from retirement, according to a Rest member survey.
The fund’s survey of over 1,596 members, including over 500 aged 18–34, found 51 per cent are concerned about having insufficient super in retirement.
The signs of financial stress in the present day are also high, with 70 per cent of young Rest members worried about keeping up with cost-of-living pressures, 55 per cent struggling to achieve the financial outcomes they want now and 50 per cent often feeling stressed about meeting their day-to-day financial needs.
As a result, 73 per cent said that this financial stress is impacting their mental health and 27 per cent are pessimistic about their financial future – higher than the average super fund member.
According to Rest, this cost-of-living pressure also has implications for the “perennial challenge” of engaging young people with their super.
“We do not want this current level of despondency to lead to many more young people disengaging entirely from their financial future which would make the challenge even more difficult,” said Rest chief executive Vicki Doyle.
“We want the superannuation system to give all members, including young members, the best possible retirement outcome.”
Similarly, a recent survey by Virgin Money Super found around 60 per cent of Gen Y and Z Australians do not see super as a priority, as they are more focused on immediate financial priorities like paying off debts.
Super funds part of solution
On a more optimistic note, the Rest survey did show that 38 per cent of young members who think about their super today feel more confident about the future.
Doyle said super funds should not forget the experience and needs of young people when considering the future of superannuation in Australia and called for them to be part of the solution.
“Our research shows that, when they do engage with their superannuation, members can feel more confident about their future. Earlier and more regular engagement can lead to better retirement outcomes,” she said.
“This is why it’s so important that funds make it simple for members to access and understand their superannuation, and provide seamless experiences through digital advice, apps and online customer service.”
Rest recently revealed that it had seen a sharp uptick in the use of its digital advice tools and a sustained increase in demand for simple advice over the past five years from members who traditionally have not sought financial advice, particularly young people and women.
However, Doyle added that super funds can’t do it all alone and also spoke to policymakers and other stakeholders, ensuring there is intergenerational equity in the system.
“Recent changes to the super system have supported fairer outcomes, including the removal of the $450 monthly income threshold and the introduction of payday super. We need to build on this momentum and implement further reforms, such as superannuation contributions on paid parental leave,” she concluded.
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