Costs of a comfortable retirement rise again, sparking new warning

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High insurance, electricity and food costs have helped push the cost of a comfortable retirement above $72,000 a year, prompting warnings for people to plan earlier for life after work.

New figures from the Association of Superannuation Funds of Australia show a couple aged about 65 must spend $1382 a week to be comfortable, while a single must spend $982 – well above current age pension payments.

It comes as separate analysis from the nation’s biggest super fund, AustralianSuper, found the average age of people seeking retirement financial advice is 57, which for many is too late.

ASFA’s retirement standard for the December quarter, a record high of $72,148 for couples and $51,278, grew 3.5 per cent over 2023, below the official CPI inflation figure of 4.1 per cent.

ASFA CEO Mary Delahunty said the lower figure reflected “substantial” CPI increases in areas not affecting the retirement standard, including tertiary and secondary education, sports participation and tobacco.

Leading retirement costs higher was a 16.2 per cent jump in insurance prices in 2023, while food and electricity prices also climbed more than general CPI.

Ms Delahunty said the increase in compulsory Super Guarantee payments to 12 per cent by mid-2025 would help more people reach ASFA’s comfortable retirement standard level, with about half of retirees achieving it by 2050.

To reach it today, a couple needs a combined super balance of $690,000 and a single needs $595,000, combined with some age pension.

Leisure spending is the biggest component of comfortable retirement budgets, at almost $333 per week for a couple.

“The leisure category includes travel, sporting activities, eating out, going to the cinema and streaming service subscriptions,” Ms Delahunty said.

“All of these are important activities for retirees to remain connected to their communities and to keep their minds and bodies active,” she said.

“Following the Covid peak, domestic and international holidays are now more affordable. The retirement standard budgets assume a domestic trip once a year and at the comfortable level an international trip once every seven years”.

Meanwhile, AustralianSuper’s member research showing advice is sought at an average age of 57 also found someone could boost their retirement balance by $117,000 by salary sacrificing $50 a week from age 35.

ASFA CEO Mary Delahunty. Picture: NCA NewsWire / Ian Currie

It urged people to seek retirement advice earlier, and AustralianSuper financial planner Fern Havea said those who did not could find their options were limited and they might have to work longer.

“It’s a compromise I’ve seen people make on many occasions,” Ms Havea said.

“They seek advice at 59 and want to retire at 60; but to achieve their desired lifestyle, they end up working until they’re close to 70,” she said.

“The best time to start retirement planning is now – it is never too early.

“There are common actions people can take at every age because planning is cumulative over the course of your life.”

Ms Havea said people could check they were in the right fund by examining long-term performance, fees and insurance, consider making extra contributions, check their super balance and use online tools to gain a greater understanding of their retirement options.

ASFA’s Ms Delahunty said it was “never too soon to engage with your superannuation and begin planning for retirement”.

“The role of super is increasingly significant but the importance for people of the government-provided pension and the accumulation of private savings is ongoing,” she said.

Originally published as Costs of a comfortable retirement rise again, sparking new warning