How much money seniors now pay for a comfortable retirement

Household expenses for seniors are up sharply, but there is some relief as the latest figures show just how much you need now to be comfortable in retirement.

Surging electricity prices have helped push the annual cost of a comfortable retirement towards $72,000 for a couple and $51,000 for a single, new figures show.

However, food inflation – a key household cost pressure for seniors – has eased, according to the latest ASFA Retirement Standard, to be released on Wednesday by the Association of Superannuation Funds of Australia.

It found the cost of retiring comfortably climbed 5.5 per cent in the year to September 30, slightly above the nation’s official inflation rate of 5.4 per cent for the same period.

ASFA says a single retiree needs a balance of $595,000 at age 67 to achieve a “comfortable” lifestyle income of $50,981 using a combination of their nest egg and age pension payments. A couple requires $690,000 combined to achieve a comfortable income of $71,724 per year – but has the benefit of two super balances to reach it.

ASFA interim CEO Leeanne Turner said it was estimated that about one-third of current retirees had super savings in line with the comfortable Retirement Standard budget, up from about a quarter of retirees a decade ago.

“ASFA expects at least half of all Australian retirees will meet the ASFA Comfortable Retirement Standard by 2050 as the system continues to mature and the benefits of the 12 per cent Superannuation Guarantee flow through to a greater number of people,” she said.

A comfortable retirement now costs a couple almost $72,000 a year. Picture: iStock

Cost increases in the past year were driven by utilities rising 12.6 per cent, with electricity bills up 4.2 per cent in the September quarter alone. Households that were ineligible for government electricity rebates had bigger power price rises.

Petrol prices rose 7.2 per cent in the three months to September 30, their biggest quarterly rise since March 2022.

However, annual food inflation eased to 4.8 per cent in the quarter, down from 7.5 per cent in the June quarter and well below its peak of 9.2 per cent for the December 2022 quarter. Fruit and vegetable prices fell 6.4 per cent for the year, ASFA said.

Ms Turner said this fall was “a welcome relief”.

“Retirees tend to spend a greater proportion of their total budget on food than the general population,” she said.

A recent survey by Colonial First State found less than half of Australians aged over 50 felt financially prepared for retirement.

CFS head of technical services Craig Day said some were still making retirement planning mistakes that could be costly.

These mistakes included leaving money in super after retiring where it could be taxed at 15 per cent rather than switching to a tax-free, account based pension, he said.

Other seniors did not plan to make the most of Centrelink entitlements, Mr Day said.

“Many Australians can get more out of their age pension benefits by making a few simple changes to their finances,” he said.

“For example, if your partner hasn’t reached age pension age yet, any money in their name in the accumulation phase of super is exempt under both the income and assets tests.

“Simply contributing to your partner’s super account instead of your own could result in you being eligible for more age pension benefits.”

Some seniors wrongly assumed that they must stop work completely to qualify for a pension, Mr Day said.

“Some or all of your income may be excluded from the income test under the Work Bonus,” he said.

“Even if you are receiving the age pension you can earn up to $300 per fortnight from work and it won’t count towards the income test.

“During any periods you don’t work, the $300 also builds up in an income bank and can allow you to earn more later without it impacting your entitlements.”

Originally published as How much money seniors now pay for a comfortable retirement