The rising cost of living means single retirees will need to spend $767 more a year than this time last year, and couples will need to spend $1,131 more to live a comfortable lifestyle in retirement, according to the September quarter Retirement Standard released by the Association of Superannuation Funds of Australia (ASFA) today.
Couples wanting to live a ‘comfortable’ retirement will need to spend $58,326 per year, up 0.3 per cent on the previous quarter. This would require a joint superannuation balance of around $510,000 to achieve this. Singles seeking a ‘comfortable’ retirement will now need to spend $42,597 a year, an increase of 0.4 per cent from the previous quarter, and require a super balance of around $430,000.
Seasonal September quarter price rises for fruit (+14.7 per cent) and property rates and charges (+6.3 per cent) saw ‘modest’ budgets affected the most, while the removal of carbon pricing gave retirees some relief from rising electricity prices, which fell (-5.1 per cent).
In relation to the cost of a modest standard of living (compared with the previous quarter), singles faced a 0.5 per cent rise in annual expenditure, which grew to $23,489, and expentidure for couples rose 0.4 per cent to $33,784. This means a single person would need to spend $457 more and a couple $664 more in order to live a modest lifestyle in retirement, compared to this time last year.
ASFA CEO Ms Pauline Vamos says the rising cost of living shows just how important it is to save as much superannuation as you can afford before you retire.
“When you are no longer relying on a wage or salary, even small increases in the cost of living can hit hard, particularly when non-discretionary items such as food or medicines are affected. The best way to shield yourself against increasing costs is to save as much money as you can while you are working. This will give you the financial freedom to live the lifestyle you want in retirement.
“It’s also important that people think about creating or buying an income stream that will spread your superannuation savings across your retirement years and that can be adjusted to accommodate rising prices,” Ms Vamos says.
