How much money you now need to retire comfortably
The price of retirement is up again as petrol, food, insurance, travel and entertainment costs climb. Here’s what it now costs.
Retirement costs have climbed as surging petrol, insurance and domestic travel prices mean a couple now needs almost $63,000 a year to retire comfortably.
New data from the Association of Superannuation Funds of Australia shows a couple in their mid-60s needs to spend $1204 a week for a comfortable retirement and a single person $851.
But a quarter of Australians retiring today have a big enough nest egg to afford that, ASFA says.
Petrol prices rose 8.7 per cent in the March quarter, domestic travel prices are up 3.9 per cent year-on-year, and health insurance premiums have been rising since October, according to ASFA’s new Retirement Standard report.
It says a typical comfortable retirement includes a range of leisure activities, a reasonable car, private health insurance, good clothes and electronic equipment, and domestic and occasionally international travel. This became 0.4 per cent more expensive in the March quarter.
ASFA deputy CEO Glen McCrea said this lifestyle – and the $62,828 a couple now needed to afford it – was “not opulent”.
“People aren’t buying luxury watches or flying first class – it’s about having your life, going to the club, having a drink and catching up with your friends,” he said.
But the super balance required for this – when combined with a part age pension – is significant.
“You are looking for a couple at about $640,000 and then $545,000 for a single person,” Mr McCrea said.
He said about 25 per cent of new retirees were hitting this mark, and the move to 12 per cent compulsory super and other positive retirement savings changes from this month’s federal budget should get 50 per cent of Australians there by 2050.
“More Australians are going to retire with some dignity and I think that’s fantastic.”
In the meantime, many must survive on an age pension that pays about $37,000 to a couple and $24,000 to a single. “One-fifth of self-employed people have no super at all,” Mr McCrea said.
JBS Financial Strategists CEO Jenny Brown said while Australians were more aware of super, older retirees and those who left work a decade ago had “assumed the age pension would suffice”.
Ms Brown said today’s workers in their sixties who didn’t have enough super were often delaying retirement by a couple of years.
“Often people will go to part-time, or they finish a stressful job and get something that’s maybe not as stressful,” she said.
The age pension remains a valuable backup. Ms Brown said a homeowner couple could have super and other assets worth $401,000 and still get a full pension. A part pension stops when assets reach $880,500.
“Just $1 of part pension can give you benefits like health care cards and discounts of rego, gas, water and electricity,” Ms Brown said.
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