Each quarter the Association of Superannuation Funds of Australia (ASFA) release a retirement standard calculation, indicating the amount of cash that retirees will need to shell out on an annual basis in order to fund either a modest or comfortable lifestyle. The unfortunate although not surprising news is that prices continue to rise.
In 2002, ASFA estimated that for a single person, the annual income required to fund a modest or comfortable retirement was $16,400 and $24,500 respectively. Over the past 14 years, these amounts have increased to $23,996 for a modest lifestyle and $43,372 for a comfortable lifestyle. A couple nowadays requires $34,560 for a modest lifestyle and $59,619 for a comfortable lifestyle.
So what absorbs most of the weekly cost?
In terms of what both singles and couples need to spend money on each week, here is a breakdown.
|Modest lifestyle – single||Modest lifestyle – couple||Comfortable lifestyle – single||Comfortable lifestyle – couple|
|Household goods and services||$28||$37||$78||$91|
|Total per week||$460||$690||$832||$1,140|
Source: ASFA Retirement Standard – September 2016 quarter. Rounded to nearest dollar
With the upcoming changes to the age pension rules, most people will need to save more super in order to achieve a comfortable retirement.
ASFA CEO Dr Martin Fahy said annual growth in the overall Consumer Price Index remained low but retirees faced a number of cost increases in the September quarter.
“The increase in cost of living in retirement highlights the need for saving an adequate amount for retirement,” he said.
“In order to achieve a comfortable standard of living in retirement, an individual requires a minimum of around $545,000 and a couple around $640,000.”
Currently, less than 20 per cent of single people aged more than 65 are able to support a standard of living at or above the ASFA comfortable level. Only around 30 per cent of all couples are able to support a standard of living at that level.
— CANSTAR (@CANSTAR) December 5, 2016
What are “modest” and “comfortable” lifestyles anyway? Click here to find out.