Retiree cost of living sees modest rise

17 December 2015

| By Malavika Santhebennur |

Retiree couples aged around 65 would need to spend $58,915 a year, while singles would need $42,962, an increase of 0.2 per cent, the Association of Superannuation Funds of Australia (ASFA) Retirement Standard showed.

Despite the modest rise, ASFA chief executive, Pauline Vamos, warned retirees would still need higher than average balances to meet costs, and saving enough to meet costs would be a challenge.

"In order to achieve a comfortable standard of living in retirement, an individual requires a minimum of around $545,000 and a couple around $645, 000," Vamos said.

"Saving an adequate amount for retirement is likely to get harder rather than easier in the future as governments respond to the ageing population by looking for ways for individuals to make greater private contributions to health and aged care."

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The modest rise was attributed to price rises in pharmaceutical products (+0.7 per cent), medical and hospital services (+0.2 per cent), international holiday travel and accommodation (+4.6 per cent), fruit (+8.2 per cent) and property rates and charges (+4.6 per cent).

But this was offset by a price fall in vegetables (-5.9 per cent), telecommunication equipment and services (-2.0 per cent), and automotive fuel (-1.7 per cent).

Vamos said only 20 per cent of retirees would reach the ASFA comfortable level of lifestyle in retirement but added that 50 per cent could reach it if the superannuation guarantee level increased to 12 per cent of wages, and people increased their voluntary savings.

Vamos also warned that any changes to super taxation should take into account the effects on final retirement outcomes instead of just short-term government budget challenges.