Why Aussies are forced to stash more money away for retirement

The soaring cost of living is putting extra pressure on Australians in retirement. Here are the essential things you need to know to plan for life after work.

Exclusive: The rising cost of basic items including meat, fruit, vegetables, bread and fuel is putting extra pressure on Australians in retirement and means they have to spend more to get by.

The Association of Superannuation Funds of Australia’s latest quarterly retirement standard — an superannuation industry benchmark used to determine how much Aussies need once they stop working — has reached a record high.

The data from the June quarter found couples aged 65 wanting to live a comfortable retirement needed to spend $61,522 annually and single $43,601.

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Australian retirees are having to spend more to get by.

It is an increase of 0.8 per cent on the previous quarter.

This reiterates the super industry’s push to continue with the compulsory superannuation guarantee rate climbing to 12 per cent by 2025 which has drawn much debate in recent weeks.

It is now at 9.5 per cent and will rise again to 10 per cent in July 2021.

ASFA’s chief executive officer Dr Martin Fahy said there was “a continuous upward creep” of how much money retirees needed to live comfortably in retirement.

“We know it’s a result of the weather and drought we’ve been experiencing so a lot of the basics like bread, meat, fruit and vegetables are going up in price,” he said.

“We are also seeing things like pensioners being exposed to things like increased fuel prices, it means it’s getting tougher and tougher out there.”

The cost of basic items such as meat, fruit and vegetables is pushing up the amount of people need to spend to have a comfortable retirement.

Between the March and June quarters inflation climbed by 0.6 per cent.

The ASFA retirement standard said to achieve a comfortable retirement couples required $640,000 saved by age 65 while singles needed $545,000.

This is based on the presumption retirees owned their home outright and had good health and received a part pension.

A comfortable retirement also means retirees could have domestic and international holidays, drive a good car and have top level private health insurance.

AustralianSuper’s group executive of brand and reputation Paul Schroder said the cost of living was continuing to climb and people were living longer, requiring them to have more money stashed.

He said there were five simple things people could do to boost their retirement savings.

“Choose a super fund you trust that has lower costs and better investment earnings and consolidate your super into one account,” Mr Schroder said.

“Contribute a little more if and when you can, check your insurance to make sure you have the right level of cover and continue your membership when changing jobs and into retirement.”

@sophieelsworth

COST INCREASES

• Lamb +13.5 per cent, beef +6 per cent.

• Fuel +10.2 per cent.

• Vegetables +6.2 per cent.

• Fruit +4.9 per cent.

• Bread +4.8 per cent.

• Private health insurance +3.2 per cent.

Source: ASFA.

Originally published as Why Aussies are forced to stash more money away for retirement