How much money you’ll need to afford a comfortable retirement

A comfortable retirement is the aim of every Australian worker, but how much money will it cost? See the list.

The rising cost of living is hitting retirees harder than the rest of Australia’s population, a new report says.

A comfortable retirement now requires $63,352 a year for couples and $44,818 for singles, according to the latest ASFA Retirement Standard from the Association of Superannuation Funds of Australia.

These numbers rose 0.8 and 0.9 per cent respectively in the June quarter, but some common retiree costs had much bigger price increases, with fruit up 4.7 per cent, vegetables up 5.5 per cent and private health insurance premiums rising 2.7 per cent.

ASFA CEO Martin Fahy said retiree cost increases had accelerated after Covid-19 had previously delayed price rises for things such as health insurance.

“The lived experience of retirees is different to that of the wider population in terms of price increases,” Dr Fahy said.

“They are particularly exposed to the basics – food, petrol, health insurance et cetera.

“They tend not to benefit from areas where we see low inflation or price decreases”, such as childcare, education, whitegoods and clothing.

In the past 12 months petrol prices had jumped 27.3 per cent while medical and hospital services rose 6.7 per cent, ASFA found.

“Retirees also exposed to aged care and health care costs which are both running ahead of normal inflation,” Dr Fahy said.

“None of us wants to have the retirement of our grandparents,” he said.

Dr Fahy said future retirees would be affected by last year’s superannuation early withdrawal scheme that left one million Australians with no super.

He said the $38 billion withdrawn in that scheme had a long-term cost of $100 billion because that money would no longer be growing inside super and people who withdrew had missed the stockmarket's strong recovery since mid-2020.

Financial strategist Theo Marinis said Australia’s current annual inflation rate of 3.8 per cent “understates the real cost of living.”

However, he said many of his clients were telling him they were not spending as much as they were before the pandemic.

“Because we are locked down, it’s hard to even go interstate these days,” Mr Marinis said.

“Generally, people are doing okay because we haven’t got as many options to spend.”

Seniors are spending more on food and petrol, research has found. Picture: iStock

Mr Marinis said a retirement income of more than $50,000 a year was achievable for many couples because the age pension paid about $34,000 and those with the average combined super balance near $400,000 combined could expect to earn an extra $20,000.

“Even people with quite modest balances of super can achieve about $1000 a week,” he said.

Another option for retirees was to draw down more of their super during the early years of retirement then use the government’s pension loan scheme – a reverse mortgage that dips into equity in their home – to top up income.

“The Pension Loans Scheme gives you an additional 50 per cent more than the age pension, so that’s $51,000 from Centrelink, but of course that’s eating into your home.”