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Retirees’ expenditure on the rise
People heading to retirement should be saving more than ever as the expenditure for a couple wanting a ‘comfortable' retirement rose by 0.3 per cent over the March quarter.
The Association of Superannuation Funds of Australia (ASFA) said they would need a joint superannuation balance of $510,000 to have a comfortable retirement.
The figure assumes both members of the couple will not retire before qualifying for the age pension.
The cost of comfortable retirement rose by 2.7 per cent over the year to the March quarter, and 2.8 per cent at the modest level.
Pharmaceutical services were the biggest contributor, with prices rising by 6.1 per cent, followed by fuel (4.1 per cent), and medical and hospital services (1.9 per cent).
But international and domestic travel and accommodation prices fell by 2.4 per cent, as did garments for men (-2.9 per cent), accessories (-2.2 per cent) and garments for women (-1.2 per cent).
ASFA said, however, that retirees only needed very modest super savings at retirement if they were aiming for a modest lifestyle.
A couple who decides to retire at age pension eligibility age needs a lump sum amount of $35,000 while a single person needs $50,000.
"The reason that the required retirement savings amounts are relatively low is that, after recent increases, the age pension is not far short of the budgets required for a modest standard of living in retirement," ASFA said.
With the federal Budget due this week, ASFA CEO Pauline Vamos said it was a good time for the Government to think about how their policies would affect cost of living for retirees.
"Retirees often have less flexibility in their budgets, which means policy changes that increase the cost of non-discretionary items, such as electricity or fuel, may mean they have to cut back in other areas, and lower their standard of living," she said.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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