The ideal retirement is a pipe dream for the majority of Australia’s 4.7 million[1] pre-retirees amid rising living costs and retirement income expectations, new research from CoreData has revealed.

CoreData’s 2016 Post-Retirement Report, which examines retirement attitudes and intentions among Australians aged 45 and older, found that pre-retirees expect to need an average of $1,224 a week in today’s dollars (up from $1,124 in 2015 and $1,015 in 2014) and a super balance of $804,559 to maintain their desired lifestyle in retirement.

However, the majority (53.1%) think it is unlikely they will achieve this goal, up from 39.5% in 2015 and 36.1% in 2014.

To manage the risk that they will outlive their savings and the impact of rising living costs, the vast majority (81.2%) of pre-retirees plan to keep working in some capacity after they retire from full time work.

The average superannuation balances at retirement of $292,500 for men and $138,150 for women[2] fall well short of the $800,000 balance the average pre-retiree expects they’ll need.

Annuities have long been touted as the panacea to managing longevity risk – offer retirees a guaranteed income stream regardless of what happens in the markets

Challenger is the major player in this space – but given the opportunities are seemingly huge, one must wonder why there aren’t really any other major players in this space and they are not a mainstream retirement product.

Awareness and understanding of the retirement solutions available remains low among pre-retirees, with less than one in three (31.9%) claiming to have a good understanding of what an annuity can offer and only one in four (27.3%) likely to consider purchasing one in retirement.

While knowledge and understanding are key barriers to purchasing an annuity, an unwillingness to relinquish control over their money and lock it away presents another key barrier. The returns are low given the record low cash rates – plus the fees!

Although annuities are not well understood, there is latent demand for the features that an annuity can offer, suggesting education could help improve take-up.

The product alone is not the solution, it must be married up with sound financial advice and education.

[1] ABS Catalogue 6238.0

[2]Superannuation account balances by age and gender, December 2015, ASFA