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Australian baby boomers have blown out their superannuation savings during their working lives, according to an analysis of more than 8,000 households across the nation.
"They have already spent all of their super before their first day of retirement," said Simon Kelly, a professor and author of the study undertaken for CPA Australia, one of the world's largest financial services organizations.
"Their debts on retirement match their savings. Most people are seeing their annual super savings statement and considering it a way of paying for the lifestyle that is being lived now," Kelly said.
"There is going to be a very big reality check," says Lindsay Tanner, a former federal minister for finance and current special adviser for Lazard Australia.
The most profligate generation in history has run up debts equivalent to their retirement nest eggs on property for their children, school fees, credit cards and overseas holidays, despite more than 20 years of generous tax concessions and compulsory contributions.
It has been 21 years since the commencement of the compulsory superannuation guarantee, a major tax and social reform intended to shift much of the retirement burden from the state to the individual.
Mandatory contributions have fostered a booming super industry with more than 1.6 trillion AU dollars (1.44 trillion U.S. dollars) under management, the world's fourth-largest pool of managed funds.
Super savings are used as a windfall to prop up lifestyles during the baby boomers' working lives rather than an investment to be nurtured for 25 years of retirement expected for the average person reaching 65 years.
Tanner, 57, said many boomers, including himself, intended to work into their early 70s, if health permits.
"But the default position is rampant," he said about failure to address ballooning budgets and falling revenues. "There remains a great complacency."
The first of the baby boomers, a demographic bubble of about 3 million born between 1946 and 1965, began to turn 65 two years ago.
The study, which has not yet been published, is expected to trigger debate about the effectiveness of 30 billion AU dollars ( 27 billion U.S. dollars) worth of annual tax concessions intended to encourage super savings.
It could also foreshadow a blowout in the nation's state pension and benefits system as cash-strapped boomers fall back on the public purse for support during their final decades.
The latest survey revealed debt has jumped to match super savings for those coming to retirement.
Nick Callil, head of post retirement solutions for Towers Watson Australia, said the company's analysis had also picked up rising debt in the lead-up to retirement.
Typically, those with less than 200,000 AU dollars (180,000 U.S. dollars) will use their lump sum to pay off debts and, rather than invest for income, and will spend most of the remainder on consumer goods or a holiday before falling back on the state pension.
"It's not a hard line, but those with more than 200,000 AU dollars are more likely to be seeking some kind of income," he said.
The CPA Australia study was conducted to see whether the compulsory super system has met its objective of boosting Australians retirement savings and self-reliance and reducing dependence on the state pension.
"It has failed, so far, to deliver on some of its core objectives," said Kelly, also a former researcher for the National Center for Social and Economic Modeling, a leading think tank with University of Canberra.
Unlike previous generations, which tended to pay off mortgages and other debt in the lead-up to retirement, boomers have "shown a big appetite for personal debt" by more than doubling their mortgage debt and increasing credit card debt by more than 70 percent in the lead-up to retirement.
