Mark Bouris has issued a stark warning that young Australians will need to retire decades later than the previous generation to keep up with rising costs.
The Yellow Brick Road CEO said Millenials and Gen Z will have to keep working far longer than they imagined, maybe until the day they die.
‘You won’t be retiring until you’re 80, maybe 90,’ Mr Bouris told listeners to his Mentored podcast.
He explained they won’t be able to retire until then ‘because they don’t have enough money’.
At the moment, most Australians retire between the age of 60 and 65, but Mr Bouris said as the cost of living continues to soar, people’s plans will have to change.
‘You might be putting super away, but the super you’re putting away today will never be enough by the time you’re 65 years of age,’ he said.
‘Everything’s gonna be so expensive, it’s just gonna keep going up and up and up. We’ve seen house prices and what they’ve done.
‘If you think that you’re gonna retire at 65 or you’re gonna have enough money to retire at 65, you’ve got another thing coming.’
Mark Bouris (pictured) said ‘the super you’re putting away today will never be enough by the time you’re 65 years of age’
Mr Bouris, who mentors entrepreneurs and business leaders at the Australian School of Business, said young workers need to ‘accept’ the situation for what it is and try to find joy in what they do.
He said they needed to adopt a simple attitude: ‘I’m going to enjoy working – that’s what I’m going to be doing, with all my mates.’
The businessman advised younger Australians to work with people who share their motivations and to avoid ‘getting pushed and pulled by different sort of points of view’.
‘It’s going to get harder and harder and harder, and therefore you’ve got to make it more fun … and more competitive,’ Mr Bouris said.
‘Enjoy the moment, every single moment, every day. Enjoy that competition. Otherwise, you’re getting left behind.’
Couples aged 65 now need $73,077 per year for a comfortable retirement, while singles need $51,805, the Association of Superannuation Funds of Australia found – but this assumes they own their home and have no mortgage.
For a more modest retirement, a couple would need to spend $47,470 per year, while a single person would need $32,897 – this, again, is assuming they own their home.
The average retirement age for Australian men is 66.2 years and 64.8 years for women, according to finance group KPMG.
Most Australians think they will have enough savings to get them through 15-20 years of retirement, but Millenials and Gen Z can’t make the same calculations as they’re going to live longer. Stock image
The average life expectancy for Australian men is 81.1, and is 85.1 years for women, meaning the average woman needs to fund 5.4 more years of retirement than a man does.
While most Australians think they will have enough savings to get them through 15-20 years of retirement, Mr Bouris said Millenials and Gen Z cannot afford to make the same calculations as they’re going to live longer.
‘If you’re going to die when you’re 100, and you retire at 65, but the assumption has been made that you’re going to die at 80, you’re going to have 20 years where you’ve got no money,’ he said.
‘So I can tell you now, you will be working till you’re 80.’
Complicating matters further, the ever increasing cost of housing means many young workers will either not have their mortgage paid by the time they hope to retire, or they will still be renting.
The number of those aged 55 to 64 who owned their homes outright almost halved from 64 per cent in 2000 to 36 per cent in 2020, while almost three-quarters of retirees with a mortgage owe more to the bank than they have in super.
‘This is why it’s so important that a robust superannuation balance is part of a “whole of wealth” retirement plan, so Australians can have confidence and security in retirement,’ Vanguard Australia managing director Daniel Shrimski said.
‘We’ve all heard about FOMO – Fear Of Missing Out – now, there’s FORO – Fear Of Running Out.’
The Super Members Council of Australia has already forecasted that 40 per cent of singles and 33 per cent of couples will end up using their entire superannuation fund to pay off their debt, meaning there is nothing left to fund their retirement.
With house price looking likely to continue to rise faster than wage growth and inflation, young workers now will face an even bigger hurdle once they reach retirement age.
In a submission to a Senate committee inquiry on the issue, the Grattan Institute predicted the proportion of Australians aged 65 and over who own a property will fall from 76 per cent to 57 per cent by 2056.
‘In about 30 years, when millennials start retiring, they’re going to have much lower rates of home ownership,’ it said.
‘If housing remains expensive, it means a big chunk of your diminished (retirement) income from super goes into housing’, Simon Kuestenmacher of The Demographics group said.
