It won’t come as a shock to learn that the rising cost of living is impacting retirees. But exactly how expensive is it to retire these days?
According to the latest figures from ASFA (The Association of Superannuation Funds of Australia), retirees are grappling with the with increasing costs of essential goods and services, seeing the cost of funding a comfortable retirement increase by 3.7 per cent over the last 12 months.i
Rising insurance premiums have been a particular source of strain recently. The June quarter saw notable increases in home and vehicle insurance costs, as well as private health insurance prices. These pressures have resulted in further financial stress on retirees, with budgets rising by 0.9 per cent for both singles and couples during the quarter. As a result, couples around the age of 65 now need $73,337 per year to enjoy a comfortable retirement, while singles require $52,085.ii
ASFA CEO, Mary Delahunty, highlighted the financial challenges that retirees are currently facing. ‘Retirees are managing an increasingly difficult landscape where the costs of essential goods and services keep rising. Health, home, and transport are vital to their well-being, yet the expenses tied to these necessities are steadily increasing,’ she explained.
For a breakdown of the funds allocated to specific household costs – in what ASFA considers to be the budget that allows for a comfortable lifestyle in retirement – see the table here.
Ms. Delahunty also emphasised the importance of both compulsory superannuation and voluntary contributions, which provide retirees with the financial security they need to enjoy their later years. ‘For Australians to have the retirement they deserve, it’s crucial that they have access to adequate superannuation savings,’ she concluded.
The ASFA Retirement Standard says the superannuation balances necessary to achieve retirement comfort are $690,000 for a couple combined, and $595,000 for single, with their income coming from a mix of super savings and a part age pension.iii
ASFA said the rising cost of living meant the need for ‘considered financial planning and adequate superannuation savings has never been more critical’.
It’s important to emphasise that the above figures are a generalisation and the exact super balance required to lead your desired lifestyle in retirement may differ widely. Working with your adviser will help you understand what your specific income needs will be, and how this will be achieved. Your retirement income may be sourced from a variety of revenue streams – from superannuation, age pension, annuities and even reverse mortgages. Your adviser will be able to guide you to the best solution for you.
At 5 Financial, we specialise in helping our clients become retirement-ready. This includes developing key wealth accumulation strategies to make sure they have the funds necessary to support a comfortable retirement.
We also assist you as you transition into retirement and provide expert advice to make sure you’re well supported and able to financially thrive in your retired years. Now more than ever, navigating the change from employment to retirement can be difficult. The good news for clients of 5 Financial is that you’re not alone, we’ll help enter your retired years feeling financially strong and confident – ready to embrace what can be the best years of your life.
iii https://www.superannuation.asn.au/resources/retirement-standard/
Please note, the above information does not constitute financial advice and does not take into account your current circumstances or goals. Please speak with a Financial Adviser before acting on any information found here or throughout the 5 Financial website.