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Many Australians living payday to payday, out of touch with retirement needs -

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ELEANOR HALL: Half of all working Australians are living from payday to payday, while having unrealistic expectations about their retirement needs.

The revelations are contained in research by the National Australia Bank's wealth management arm, MLC.

In its survey of more than 2,000 Australians, it found what it called a "striking perception problem".

MLC's manager of corporate super, Lara Bourguignon, explained the retirement expectations gap to our business editor Peter Ryan.

LARA BOURGUIGNON: It's really been interesting understanding what people define as a normal standard of living now. So if you think back to the ‘80s and ‘90s when superannuation was first starting, we really thought about standard of living as home, food, access to healthcare and education.

In the survey we found that Australians thought that really living comfortably meant that you could do whatever you want pretty much whenever you want. And that included things like eating out, having all of the latest technology, going overseas every year.

So I think even though we've ridden the last sort of 20-odd years of economic prosperity and social mobility in Australia, we're spending more as well. So I think that's where we're seeing the paycheck to paycheck come in.

PETER RYAN: So the easy access to credit, people living beyond their means, and also not having lived or worked through a recession in 23 years.

LARA BOURGUIGNON: That's right, and I found the report to be full of paradoxes, because actually, when asked, 85 per cent of participants said that they thought we were living beyond our means.

And interestingly, when you start to sort of ask them about their aspirations, they'd like to retire early and they'd like to maintain their standard of living.

So a stark reminder that we are human beings and not necessarily rational and logical beings.

PETER RYAN: Now the majority of respondents are saying they'd like to have, in today's terms, $150,000 to live on, but is that realistic when you look at what they're saving for retirement?

LARA BOURGUIGNON: Well, certainly that would show at the moment that we will have a retirement savings gap. It shows that we really need to make sure that we are clear about the objective of superannuation, that we can galvanise Australians really around saving for their retirement, really starting to have a look at what their current trajectory would have them retire on.

PETER RYAN: And some people appear to be confused as to whether or not they were middle-class or lower-class, when in fact on paper they were more likely to be upper-class.

LARA BOURGUIGNON: Yes, that was really interesting. And I think it also links to the paycheck to paycheck. I think you do have more tertiary-qualified Australians then we did 20, 30 years ago.

Our average income has increased, we have more white collar professionals, but I think what's come with that is this sort of new definition of what normal spending is.

Even though we're earning more, we need to spend more to maintain that standard of living and I think that's what's making even some of the high-income earners feeling like they're middle-class and not upper-class.

PETER RYAN: And all of this is important given that the Government is looking at the superannuation system. It's also currently looking at negative gearing.

LARA BOURGUIGNON: Yes, which is exactly why we commissioned the research. And with these facts, we can try and inform the debate and make sure that the objective of superannuation is enshrined in legislation and is a system that can be stable and give people confidence in their retirement.

And also suitable so it can help Australians live the retirements that they're aspiring to live.

PETER RYAN: Superannuation though is meant to be a long-term investment and governments keep telling us that. But once again, here we are with another inquiry into the system. How confusing is that for regular people?

LARA BOURGUIGNON: Yes it's a bit too early to comment on what might come out of the Government's review right now, but from our perspective, Peter, we just want to make sure that any changes that are made actually have a positive impact on the outcome of Australians' retirement savings.

You know, any changes generally cost to implement, and that can sometimes end up having a negative impact on retirement savings, and it isn't so complex that people do get confused and sort of think, "I'd rather put my money just into my home where I know where it is".

PETER RYAN: And it's also important for the retail superannuation industry like our National Australia Bank and MLC to be involved in this, so you do have a vested interest there.

LARA BOURGUIGNON: Of course, we've got many members that we are talking to every day, Peter, but this research was absolutely designed to share with all of our competitors, industry stakeholders, the Government, to inform and have the debate around really what and how Australians are really viewing themselves right now and what do they aspire to in retirement.

ELEANOR HALL: That’s MLC's general manager of corporate super Lara Bourguignon with our Business editor Peter Ryan. And there'll be a longer version on that interview on The World Today web site later today.