Australians need to budget more money to achieve a comfortable lifestyle in retirement. Prices have risen faster than inflation on the items retirees spend the most on, including food, energy and healthcare, meaning some will feel the squeeze this Christmas.
Homeowner couples aged 65 and over now need an annual budget of $76,505 per year to maintain a comfortable lifestyle in retirement, the latest Association of Superannuation Funds of Australia (ASFA) retirement standard found. Singles need an annual budget of $54,240.
These retirement budgets are up 1.6 and 1.8 per cent respectively in the September quarter, and 3.5 and 3.6 per cent over the year. In comparison, the Consumer Price Index rose 1.3 per cent in the quarter and 3.2 per cent annually.
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ASFA found rising living costs had pushed the price of a comfortable retirement to “record levels”, with retirees experiencing stronger price pressures than others because they spend more of their budget on essential items that have risen the most.
“Retirees might be feeling the squeeze this Christmas because prices have risen fastest in the things they spend most on, like food, energy and health,” ASFA CEO Mary Delahunty said.
“Some older people may cut back on pricier gifts, travel and social occasions to stay on top of the basics.”
ASFA found the cost of domestic holiday travel and accommodation were up 5.2 per cent, electricity prices were up 9 per cent, property rates 6.3 per cent, and eating out and takeaway up 1.3 per cent.
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The amount of money you need for retirement will depend on a number of factors, such as the lifestyle you hope to live, the costs you’ll have, whether you own your own home, and the government support you will receive.
ASFA’s retirement standard can give you an idea of what a typical retirement might cost based on estimated costs for a comfortable or modest lifestyle.
A comfortable retirement is defined as one that allows for top-level private health insurance, fast reliable telecommunications, owning a reasonable car, regular leisure activities, confidence to use utilities at home, occasional meals out, and an annual domestic trip and an overseas trip every seven years.
Couple homeowners 65 and over would need $76,505 a year to live comfortably and $50,866 to live modestly, per the standard, which would cover total weekly expenditure of $1,465.61 and $974.44 per week respectively.