When planning for retirement, your financial position is just one piece of the puzzle.
An annual study between AustralianSuper and Monash University – known as the Retirement Confidence Index (RCI) – has found there are a range of factors that determine retirement confidence.
The RCI found these four key factors help boost a person’s confidence in retirement:
1. Financial awareness and skills: this looks at a person’s level of financial literacy, attitude, behaviour, control and financial anxiety. The study found financial literacy was linked to cognitive ability, higher income, home ownership, having more assets than debts, and being financially risk averse.
2. Health and wellbeing: this measures the importance of physical and mental health, and respondents with good physical health had a higher level of retirement confidence than those with poorer health. Being married or in a de facto relationship, having dependent children, owning your own home and having a university degree also saw an improvement in mental health.
3. Social factors: this examines the impact of social connections. The study found women and those who were married or in a de facto relationship were more socially connected.
4. Retirement awareness and planning: this looks at how certain a person feels about the future, and their behaviour in terms of setting goals. Participants who set clear and specific goals scored much higher than those who didn’t.
Since the RCI began in 2017, it’s shown an improvement in financial literacy as participants approach retirement. This suggests pre-retirees are developing skills and knowledge to better manage their money.
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