Perceptions and Expenditure Patterns - Social Policy Research ...

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3 Expectations and perceptionsDo people expect that they will be able to maintain their living standard in retirement? Do retiredpeople consider that they have maintained their previous standard of living? How do perceptions offinancial hardship and financial satisfaction and prosperity change as people age? This sectionaddresses these questions using data from the Household Income and Labour Dynamics in Australiasurvey (HILDA). This is a large nationally representative panel survey of Australian households. Datafrom the first six waves of the survey (conducted from 2001 to 2006) are used here. (For moreinformation on the survey, see Watson, (ed) 2009).3.1 Retirement expectationsIn 2003, the HILDA survey asked respondents about their expectations and experiences of livingstandards after retirement. Table 1 summarises some of these responses. People who had not yetretired were asked whether they anticipated being able to maintain their standard of living afterretirement. A substantial fraction, just over one-third, reported that they did not expect to haveenough to maintain their current standard of living.Table 1 Living standards in retirement: expectations and experience(HILDA Wave 3, 2003)People aged 45 or more, who have not yet (completely) retiredDo you expect your retirement income to be more than enough, just enough or notenough to maintain your current standard of living?% (weighted)More than enough 9.2Just enough 56.7Not enough 34.0Total 100.0N (unweighted) 2,807People who have retired and are not workingWould you say (your standard of living) is better or worse since you retired?Much worse 5.8Worse 21.8The same 51.6Better 15.5Much better 5.3Total 100.0N (unweighted) 1,206Thinking about your current income [from all sources], is this more or less thanyou had expected it to be when you retired?Much less 24.4A little less 26.0About the same 36.4A little more 11.1Much more 2.2Total 100.0N (unweighted) 1,175Notes: Source, HILDA Wave 3 (Release 5.1). Cross-section weights used.6
People who had already retired were asked to compare their standard of living before andafter retirement. About half said it was the same. Of the remainder, 27 per cent reported aworse standard of living and 21 per cent a better standard of living. 4 They were also askedwhether their current income was what they anticipated before retirement. Around halfreported that it was less than expected.One possible interpretation of these results is that the very substantial drop in incomeassociated with retirement was unanticipated by the current retired generation, but that thenext generation about to retire now expects it. Though people are more likely to say that boththeir living standards and their incomes have deteriorated since retirement than to say theyhave improved, the difference is not large. This could be because there are offsetting costreductions associated with retirement, or it could be because people reduce their expectationsof ‘standard of living’ so as to require less expenditure.3.2 Perceptions of living standards and financial hardshipThe HILDA survey also regularly collects information on respondents’ evaluations of their financialsituations and reports of financial hardship. 5Respondents are asked in the interview part of the survey to score their satisfaction with differentaspects of their lives on a 0-10 scale (high scores indicating more satisfaction). One of these aspectsis satisfaction with financial situation. (Others include home, employment opportunities, how safethey feel, community, health and neighbourhood, and amount of free time). For the purpose of thispresent report, the variable, satisfaction with financial situation, is standardised with a mean of zeroand a standard deviation of one (for the population of people aged 45 and over).In the self-completion questionnaire part of the survey, respondents are asked a question abouttheir perceived prosperity. ‘Given your current needs and financial responsibilities, would you saythat you and your family are... Prosperous, very comfortable, reasonably comfortable, just gettingalong, poor, very poor?’ This is mapped onto a six-point scale (high scores recoded here to indicatemore prosperity) and standardised as for the satisfaction score.They are asked whether any of a number of events had occurred for them since the beginning of theyear because of a shortage of money:could not pay electricity, gas or telephone bills on timecould not pay the mortgage or rent on timepawned or sold somethingwent without mealswas unable to heat homeasked for financial help from friends or familyasked for help from welfare/community organisations45In addition, most people reported having more leisure and more reported being happier (not shown here).Similar information is collected in the ABS HES. The HILDA survey data is used here to take advantage ofthe repeated collection of this information over several waves.7
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Page 33 and 34: Bradbury, Bruce (1997), 'The living

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