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Australian retirees modest but consistent spenders
Australian retirees are not big spenders, irrespective of the level of their retirement income, according to new research released by the Australian Institute of Superannuation Trustees (AIST).
The research, commissioned by AIST and conducted by Monash Business School's Australian Centre for Financial Studies (ACFS), showed that contrary to conventional wisdom, expenditure remained relatively constant throughout retirement.
The research found that 80 per cent of retired households reported expenditure levels considered to be the most basic standard living for retirees ($23,797 for singles, $43,226 for couples).
It found significant regional variations in expenditure levels for retirees across Australia, with those in Sydney recording the highest average household expenditure of around $44,000, compared to around $34,000 for those living in Melbourne and $25,000 for those in Tasmania.
Commenting on the survey findings, AIST chief executive, Tom Garcia said it challenged perceptions of retiree expenditure and was timely given the current discussion around the fairness of the super tax concessions, super's objective and what is considered to be an ‘adequate' income in retirement.
"Learning more about what retirees actually spend compared to their income will help us make evidence-based decisions about adequacy and super policy," he said.
"There are a lot of myths and fear about what retirees need to live on. This study suggests that most older households, including wealthy ones, have relatively modest expenditure and — on average — have the highest financial satisfaction."
Garcia pointed to the dichotomy which existed between poorer and wealthier retirees.
"On the one hand we have low income households that appear to be taking on debt or selling down assets to meet their living expenses, while at the other end of the spectrum, the very wealthy households appear to have high rates of disposable income," he said.
ACFS executive director, Professor Rodney Maddock, said the report's findings provided important evidence in the discussion about superannuation and retirement income.
"The finding that retirement spending is largely driven by cost-of living pressures such as geographical location and household structure rather than wealth has important implications for the design of retirement income products, and for superannuation policy," said Professor Maddock.
"The report also exposes the need for greater data around retirees' expenditure on aged-care and leisure to provide a complete picture of retirees' behaviours."
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