The report highlights that older Australians, particularly those over 65 who aren’t working full-time, are at risk of missing out on significant retirement income due to overly complicated systems. As nearly 3 million people prepare to leave the workforce, urgent action is required to ensure that retirees aren’t disadvantaged by a rigid system that could potentially erode their savings.
The Cost of Complexity
According to the Super Members Council, the complicated nature of Australia’s superannuation and pension systems is directly impacting retirees’ financial outcomes. The report estimates that older Australians miss out on an average of $6,500 annually due to these complexities. When calculated over the course of a lifetime, this equates to a significant $136,000 lost in potential retirement income.
The situation is further compounded by the fact that many retirees still have their superannuation funds sitting in taxed savings-phase accounts. This financial setup reduces their disposable income and forces them to pay more taxes than necessary. Research has shown that a considerable number of retirees are not able to fully access the benefits of their superannuation, hindering their quality of life in retirement.
Misha Schubert, from the Super Members Council, stressed the urgency of addressing these issues, noting that Australia is on the cusp of a demographic shift with millions of retirees set to join the system in the coming years. “We need to make the shift into retirement so much simpler, easier and more intuitive for everyday Australians,” Schubert told Yahoo Finance.
A Call for Reform
The report’s recommendations focus on the need for simple, affordable financial advice to help retirees make informed decisions about their superannuation. One key suggestion is to expand digital tools that enable retirees to optimise their financial outcomes and share data securely with the government for more effective retirement planning.
Beyond these immediate fixes, the report also advocates for more profound changes to Australia’s retirement system. It argues that a simpler pathway into retirement, along with the ability to draw down superannuation funds flexibly, could empower retirees to maximise their savings. In particular, the report calls for a rethinking of the tax measures surrounding superannuation, including minimum drawdown rates, which may not always align with retirees’ financial needs.
One of the most pressing misconceptions addressed in the report is the myth that older Australians tend to underspend in the hope of leaving their superannuation as part of their inheritance. In reality, data shows that many retirees are withdrawing more than the minimum amount required. In 2024–25, for example, 64% of tax-free retirement account holders withdrew above the minimum, a figure that rises to 77% for those with balances under $50,000.
The Super Members Council’s report makes it clear that without swift intervention, the complexities of Australia’s retirement system will continue to hinder the financial security of retirees, depriving them of their rightful benefits and putting a strain on their quality of life in later years.
