Financial Illiteracy and a Push for Self-Efficacy is Leaving Aussies Ripped-Off in Retirement
Australia has a fundamental problem in its approach to retirement planning.
The Australian superannuation system has become the primary means for workers to save for retirement, but Best Financial Planners has found that financial illiteracy prevents many Australians from optimising their savings and growing their nest egg.
Through their research, financial specialists at Best Financial Planners have discovered that despite only 27% of Australians reporting to have ever received financial advice, consumers are still eager to seek financial guidance. But barriers like a low level of financial literacy – especially among women and lower socio-economic groups – stand in the way.
Research shows that younger Australians, in particular, lack a strong understanding of key financial concepts. The gap between generations is evident—while older Australians (over 65) exhibit a much stronger grasp of financial principles, younger generations are left behind.
[Results of surveyed Australians answering questions within three categories of financial literacy, separated by age: Best Financial Planners, Australia’s Barriers to Proactive Retirement Planning]
Australia’s gender gap in financial literacy is also stark, with women demonstrating significantly lower financial knowledge than men. According to research, only 34% of Australian women understand the three measured tenets of financial literacy, directly resulting in lower retirement income on average compared to men. 
[Results of surveyed Australians answering questions within three categories of financial literacy, separated by gender: Best Financial Planners, Australia’s Barriers to Proactive Retirement Planning]
Over time, policymakers have increasingly shifted the responsibility of retirement savings onto individuals rather than relying on employer pension schemes or government-provided pensions. However, these revealed financial illiteracy rates demonstrate self-efficacy is a failing solution, which leaves generations of Australians underprepared for retirement.
A large majority of Australians (75%) also find the retirement system complex. Without the knowledge of how to effectively manage and optimise their superannuation, many consumers are delaying retirement, pushing the retirement age further back nationwide.
To address Australia’s retirement planning crisis, Best Financial Planners asserts that Australians need to boost their financial literacy by educating themselves about the fundamentals of financial management. Younger Australians, women and those of a lower socio-economic status, in particular, need to take an active role in their financial futures to safeguard themselves against the literacy gaps and the government’s relaxed attitude to increasing the pension age. This begins with taking the necessary steps to increase knowledge about their retirement options and seeking professional financial advice sooner rather than later.
As a nation, we seek financial knowledge too late, when the pressure of retirement is looming, and not in our early careers, when it can make a significant difference.
To access the full report from Best Financial Planners, please follow this link.
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Key Facts:
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Australia’s main barriers to effective retirement planning include financial illiteracy, distrust in financial institutions and service providers, and a culture of seeing money talk as taboo.
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More than half of Australians under 35 are significantly less likely to be educated on three key markers for financial literacy, these being inflation, interest, and risk diversification.
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There is a recorded gender gap in Australia’s financial literacy rates, with 1 in 2 men demonstrating financial awareness compared to only 1 in 3 women.
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Australia’s financial illiteracy rates are contributing to growing distrust in financial institutions and financial service providers, which further inhibits financial self-efficacy for Australian consumers preparing for retirement.
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Financial illiteracy rates are resulting in more Australian consumers delaying retirement or retiring with insufficient retirement funds.
About us:
Managed by Australian finance specialists, Best Financial Planners is a local directory of Australia’s top financial advisors, offering support, guidance and advice over a comprehensive range of financial needs for Australian consumers and business owners. Best Financial Planners continues to play a foundational role in delivering wealth growth and security for Australian consumers across decades of market and economic fluctuations.
Contact details:
For more information or to interview Beth at Best Financial Planners directly, please contact Jon Glavinas at [email protected].
