Vanguard’s How Australia Retires 2025 Report: Key Insights
Vanguard’s newly released How Australia Retires 2025 report sheds light on how Australians prepare for and experience retirement. Based on a nationally representative survey of 1,800 Australians aged 18 and over (conducted in February 2025), the report reveals a stark contrast in sentiment between those working and those retired. While 65% of retirees feel positively about retirement, only 43% of working Australians share that optimism.
To better understand what drives retirement confidence, the report identifies five key building blocks that are closely linked to feeling prepared and positive about life after work.
1. Financial Literacy
Financial literacy is the ability to understand and apply key financial concepts to make informed decisions. Strengthening your financial literacy can build confidence, improve decision-making, and help secure your financial future.
Key concepts to understand:
Interest: Compound interest helps your savings grow by earning interest on both the original amount and the accumulated interest.
Inflation: Inflation erodes purchasing power over time. Understanding its impact helps you choose smarter investment and savings strategies.
Diversification and Investment Risk: All investments carry risk. Diversifying your portfolio can reduce the impact of market volatility.
2. Understanding the Retirement System
Retirement literacy involves knowing how Australia’s retirement system works, particularly superannuation and Age Pension rules.
Focus areas include:
Superannuation: Learn how super works—contributions, tax treatment, and access rules.
Age Pension: Understand eligibility criteria and how the pension complements super in retirement planning.
3. Having a Solid Retirement Plan
A good retirement plan ensures you can support your desired lifestyle after work. It doesn’t have to be perfect—start by asking:
How long might I be retired?
What lifestyle do I want?
How will I spend my time?
Confident retirees often seek professional advice and understand how much they can safely spend each year. Retirement planning is a dynamic process—review and adjust regularly.
4. Making Voluntary Super Contributions
Voluntary contributions can significantly boost your retirement savings—and may provide tax benefits.
Common contribution methods:
Salary Sacrifice: Redirect pre-tax income into your super. Contributions are taxed at 15%, which may be lower than your marginal tax rate.
After-tax Contributions: Contribute from your take-home pay, often with no extra tax when added or withdrawn (depending on your age).
Claiming Deductions: You may claim a tax deduction on after-tax contributions, treating them as concessional (taxed at 15%). Be mindful of contribution caps.
Consult a financial adviser or registered tax agent to tailor the right strategy for you.
5. Engaging with Your Super Provider Twice a Year
Superannuation is often Australians’ second-largest asset—yet it’s frequently overlooked.
Three simple engagement habits:
Check Your Balance: Twice a year is enough to stay informed.
Compare Fees and Performance: High fees can erode your savings. Use tools like Vanguard Super’s “Compare your super” to evaluate your fund.
Review Your Annual Statement: Spend 15 minutes reviewing your member statement each year—usually sent in August or September.
Want to assess your retirement confidence?
Take Vanguard’s SmartRetire quiz to find out how ready you are for life after work.
Rick Maggi CFP, Financial Advisor Perth, Westmount Financial