New figures from the Association of Superannuation Funds of Australia (ASFA), show the true cost of retirement.
ASFA’s Retirement Standard tracks the yearly budget retirees need to enjoy a comfortable lifestyle, including travel, dining out, private health cover, and recreational activities.
They found that the cost of funding a comfortable retirement has gone up by 75 per cent over the past two decades, outpacing general inflation.
For couples aged over 60, the cost is now $77,375 per year, while the cost for a single person is now $54,840 annually.
Couples will need a superannuation balance of $730,000 for a comfortable retirement, while singles will need $630,000 – figures that have steadily increased alongside the cost of essentials, including water electricity, fuel and health services.
According to the data, water costs have increased by 161 per cent, electricity by 150 per cent, fuel by 113 per cent, and medical and hospital services by 112 per cent over the past 20 years.
Other minor lifestyle costs like internet, domestic travel, and modest holidays have also increased over the past few years.
ASFA also shared their benchmark for a “modest” retirement, covering essentials beyond the age pension.
Couples will require $51,299 annually, while singles need $35,503, which would mean they would need super balances of $120,000 and $110,000 respectively.
However, these figures assume ownership, while 20 per cent of retirees rent, which means their costs are even higher.
For renters, a modest lifestyle requires a lump sum of $385,000 for couples and $340,000 for singles.
The benchmark reflects changing social and technological norms, as ASFA takes into consideration other costs like streaming subscriptions, internet, private health cover, transportation and recreational activities.
The standard is intended as a guide for a comfortable and engaged life, supporting social connection, good health and an active lifestyle, rather than setting a bare minimum for getting by.
From March, deeming rates are also set to change, meaning retirees with higher financial assets might receive less age pension entitlements.
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