Retirement is supposed to be a time of freedom, yet Vanguard\u2019s new How Australia Retires 2025 report shows most of us are either underprepared, overconfident in the wrong areas, or weighed down by debt.<\/p>\n
The survey of more than 1,800 Australians is full of charts that reveal just how wide the gap is between retirement dreams and reality. Let\u2019s start with the basics: sentiment, income expectations, and planning.<\/p>\n
Nearly half of working-age Australians have no retirement plan at all, and only 43% feel positive about retirement, compared to 65% of current retirees. Younger Australians are the most anxious, and with good reason – rising housing costs, inflation, and lower home ownership rates have reshaped what retirement could look like.<\/p>\n
In this wire, I\u2019ve highlighted the six charts from Vanguard\u2019s latest retirement report that made my jaw drop. You can also find the link to the full publication from Vanguard at the end.<\/p>\n
1. Retirement income expectations have blown out<\/p>\n
Younger Australians under 45 believe they\u2019ll need $100,000+ a year in retirement, almost double what retirees are actually spending today ($55,000 on average).<\/p>\n
\u201cOn average, Australians under the age of 45 estimated they would need a minimum household income of $100,000 per year in retirement,” Vanguard says.<\/p>\n
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Source: Vanguard – How Australia Retires 2025<\/p>\n
I agree with the younger cohort. In high-cost cities like Sydney or Brisbane, six figures in retirement income isn\u2019t unrealistic if you don\u2019t own a home. Housing costs and inflation have rewritten the rulebook on what \u201ccomfortable\u201d really means.<\/p>\n
If you missed it, my wire from last week breaks down the subjective meaning of a \u201ccomfortable\u201d versus \u201cmodest\u201d retirement.<\/p>\n
Education<\/p>\n The cost of a comfortable retirement just topped $75,000: Can you afford it?<\/p>\n <\/a>2. Yet… Australians aren’t confident about growth assets<\/p>\n While income expectations have surged, too many Australians lack confidence in growth assets – the very investments that will actually do the grunt work to fund their retirement.<\/p>\n Vanguard found that 57% of Australians feel most confident in cash and savings accounts\u2026 ironically, the product with the lowest returns.<\/p>\n Fewer than half expressed confidence in anything else, including super, the Age Pension, ETFs and, worryingly, even how a mortgage works.<\/p>\n “Only 35% of Australians were very or extremely confident in their understanding of superannuation products. Given the central role of superannuation in retirement planning, this is a concern,” the report notes.<\/p>\n Source: Vanguard – How Australia Retires 2025<\/p>\n This is a wake-up call: Australians desperately need better financial education.<\/p>\n Parents should be teaching their kids about money and investing. And if you\u2019re financially savvy, please share your knowledge with friends who need the help – whether it\u2019s over a coffee, a lunch, or by pointing friends toward a good adviser. The cost of ignorance compounds even faster than interest.<\/p>\n 3. The gap between ideal and realistic retirement ages<\/p>\n Every generation expects to retire later than their ideal age. For Gen Z, the gap is almost eight years; for Millennials, about seven. People want to be done by 60, but think they\u2019ll work closer to 70.<\/p>\n \u201cAll age groups expect to retire later than their stated ideal age. This trend is consistent across generations, with younger Australians reporting a wider gap between their ideal and expected retirement ages. For Gen Z, the gap is nearly eight years; for Millennials, it is around seven years.\u201d<\/p>\n Worse, those who have no plan expect to work until their 70s. It\u2019s a stark reminder: the less you plan, the more likely you\u2019ll be working long past your preferred exit.<\/p>\n Source: Vanguard – How Australia Retires 2025 One picture… two realities of modern Australia<\/p>\n Rising prices and falling ownership rates mean younger Australians are starting to let go of the idea altogether, reshaping what retirement could look like. The contrast between generations could not be starker.<\/p>\n Among Boomers, 77% believe home ownership in retirement is very important. Among Gen Z? Just 57%. As Vanguard bluntly puts it:<\/p>\n \u201cFor many younger Australians, home ownership feels increasingly out of reach. This may explain why younger Australians rated home ownership in retirement as less important than older Australians.”<\/p>\n Source: Vanguard – How Australia Retires 2025<\/p>\n No doubt any adviser or parent would find this troubling, because renting into retirement brings its own challenges – from the constant risk of rising rents to the uncertainty of long-term stability with respect to living arrangements.<\/p>\n 5. A mortgage-free retirement is no longer the norm<\/p>\n Yet for those lucky enough to own a home, retirement isn\u2019t free of challenges. Over one-third of Millennials and one-quarter of Boomers expect to carry a mortgage into retirement – compared with just 8% of today\u2019s retirees.<\/p>\n “More than one in three Millennials (36%) expect to have a mortgage when they retire, compared to 27% of Gen X and 24% of Baby Boomers,” the report says.<\/p>\n Source: Vanguard – How Australia Retires 2025<\/p>\n At first glance, it might seem puzzling that nearly a quarter of Boomers expect to retire with a mortgage despite decades of soaring house prices. But it\u2019s precisely because of those gains that many have tapped their equity to help children into the market – often at the cost of retiring when they\u2019d ideally like.\u00a0<\/p>\n For younger Australians, the story is simpler: housing costs are so high that debt is unavoidable. Either way, mortgages are stretching deeper into old age.<\/p>\n 6. How Australians plan to deal with mortgages in retirement<\/p>\n This was the chart that shocked me most.<\/p>\n Nearly half of working-age homeowners expect to carry their mortgage into retirement. Another 25% plan to raid their super to clear the debt, while 20% say they\u2019ll sell the family home. Each path has trade-offs.\u00a0<\/p>\n Using super to pay off the mortgage means pulling liquid capital from your fund, which could reduce future income.\u00a0<\/p>\n Keeping the mortgage through retirement may mean working longer or juggling lifestyle needs against ongoing repayments.<\/p>\n And downsizing? That raises the hardest question of all: where can you realistically move that\u2019s cheaper without sacrificing your quality of life?<\/p>\n Source: Vanguard – How Australia Retires 2025<\/p>\n As Vanguard notes: \u201cOur research finds that few Australian retirees are planning to move to smaller or more affordable homes.\u201d<\/p>\n From my own experience, that\u2019s because it\u2019s virtually impossible to find smaller, good-quality homes designed for retirees or folks getting older. We don\u2019t talk about this enough, but it\u2019s a key reason why many Boomers are holding onto large detached houses – not necessarily because they want to, but because they feel they have no other option.<\/p>\n It’s quite the dilemma: young Australians can\u2019t get onto the property ladder, while older Australians can\u2019t get off it. An angle to an issue seldom discussed.<\/p>\n What it all means<\/p>\n There are three big takeaways from Vanguard\u2019s report:<\/p>\n Generational divide \u2013 Younger Australians expect to need more to retire, plan less, and face lower home ownership prospects.<\/p>\n Financial literacy gap \u2013 Too many Australians don\u2019t understand super, investing, or even mortgages.<\/p>\n Housing debt drag \u2013 Mortgages and rent are increasingly following Australians into retirement.<\/p>\n It feels bleak, but it doesn\u2019t have to be. Here are three actions to consider taking today:<\/p>\n Reach out to an adviser. If parts of this report ring true for you – whether you own a home or are worried about how to strengthen your retirement plan – speaking to an adviser can give you clarity and direction.<\/p>\n Take an interest in investing.\u00a0We often debate between property vs shares, or active vs passive. The reality is doing something is better than nothing. Even simple, low-cost strategies like broad-market ETFs can make a dramatic difference to your wealth.<\/p>\n Take control of your super. Don\u2019t expect the government to roll out the red carpet. The current Age Pension is about $600 a week, and the median super balance is just $60,000. That doesn\u2019t come close to six-figure income expectations. (See the video below on the changes I made to my own super that have made a huge difference.)<\/p>\n Retirement doesn\u2019t have to be something we fear. But Vanguard\u2019s message is clear: if you don\u2019t plan for it, you\u2019ll be working much longer than you want – and possibly still paying off a mortgage while you do.<\/p>\n Useful resources Education<\/p>\n 3 changes that helped my super grow faster<\/p>\n <\/a><\/p>\n Stay tuned for next week\u2019s wire, where I\u2019ll share how I – alongside industry experts – am building simple investing strategies using just a handful of ETFs while managing the abundance of growing choice.<\/p>\n DOWNLOAD VANGUARD’S REPORT<\/p>\n \u27a1\ufe0f\u00a0Vanguard How Australia Retires 2025 Report<\/a><\/p>\n Never miss an update<\/p>\n
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\n4. Home ownership no longer the dream… because it’s unattainable\u00a0<\/p>\n![\"One](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2025\/09\/Vish-OP-retirement_inline2.jpg\")
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