The Association of Superannuation Funds of Australia (ASFA) retirement standards have been around since 2004, the year John Howard won a fourth term, Jetstar took off and Steve Waugh retired.

Had Waugh been 67 instead of 38, his retirement planning may have been informed by the ASFA standards, which assess the levels of income Australians of that certain age needed to enjoy a “comfortable lifestyle” or a “modest lifestyle” in retirement.

Fast forward to 2022, and the current ASFA comfortable lifestyle standard is $45,239 per annum for a single person and $63,799 per annum for a couple, while the modest lifestyle standard is $28,775  for a single and $41,446 for a couple respectively.

ASFA’s numbers have long been considered gospel for pre-retirees, financial planners, the media and even governments, but just how reasonable and relevant are they?

A question of relevance

Ross Clare, ASFA’s director of research, says the standards are broadly accepted, work well and have retained their relevance over the years.

“The AFSA retirement standards are used in online calculators, by institutions running education seminars, and by financial planners making retirement income projections for individual clients,” Clare said. “People relate more easily to concrete numbers and the standards are well-regarded benchmarks for people to consider when they assess how they are tracking.”

Clare believes ASFA’s record of granular research into how much people say they need in retirement is what has made the ASFA numbers the gold standard.

“We use a bottom-up approach to setting goals for people in and approaching retirement. We look at actual budget items and costings by analysing household expenditure, survey data and focus group data. Of course, the spending pattern we employ will not be the same for everyone, but it’s a good starting point.”

ASFA updates its figures every quarter to reflect changes in prices. Rather than simply making CPI corrections, they conduct detailed analyses and make adjustments to each component in their budgets. And every five or six years, they take a deeper look at the patterns of consumption in the economy.

Time brings change

“What people buy changes over time,” Clare says. “For example, our original budgets didn’t include streaming services or broadband/NBN costs. At one point we didn’t have private health insurance but we introduced it because more than 50 per cent of retirees have it.

“Adjustments are generally minor and reflect changes in the bulk of retirees’ spending habits. Examples of recent tweaks include the frequency of overseas trips and spending on home renovations.”

Clare says ASFA get substantial feedback from retirees, who are very willing to share their lived experiences and discuss the items in the budget that inform the standards.