The living costs of a comfortable retirement fell by 0.5% in the September quarter, but Australians still need the same amount of savings in superannuation to enjoy a nice lifestyle.
That's according to new data from the Association of Superannuation Funds of Australia (ASFA), which is the peak policy, research, and advocacy body for Australia's superannuation industry.
According to the newly updated AFSA Retirement Standard, single Australians need $595,000, and couples need $690,000 in superannuation savings by age 67 to enjoy a comfortable retirement.
This assumes that a retiree owns their own home, receives a part-pension, and draws down all their capital with an annual investment return of 6%.
In terms of annual living costs, AFSA says a comfortable retirement now costs $51,814 per year for singles and $73,031 for couples.
This is down from the June quarter, when a comfortable retirement cost $52,085 per year for singles and $73,337 for couples.
AFSA defines a 'comfortable' retirement as the ability to cover life's essentials plus a range of other costs.
These costs include private health insurance, exercise and leisure activities, occasional restaurant meals, a domestic trip once per year, and an overseas holiday every seven years.
Why did retirement living costs fall in the September quarter?
AFSA said the reduction in living costs in the September quarter was driven by lower petrol prices and short-term energy rebates from the Commonwealth and state governments.
Living costs for retirees have also increased by less than the rate of inflation over the past 12 months.
Retirees' living expenses increased by 1.8% compared to the general Consumer Price Index (CPI) rise of 2.8%.
ASFA CEO Mary Delahunty said:
The easing in short-term retirement budget pressures will be a welcome holiday gift for retirees at this time of year.
It's great that in its 20th year of providing Australians with the definitive guide on how much money they need in retirement, the ASFA Retirement Standard can show some relief for retirees after a couple of tough years of rising costs of living.
Delahunty points out that the reduction in living costs in the September quarter was unusual, though.
Over the past 20 years, retirees' living expenses have generally outpaced those of the general population.
This shows Australians need to manage their retirement savings carefully and is why it's clear Australians need better access to trusted, affordable financial advice to help them plan for their financial future.
That's why we welcome the financial advice reforms recently announced by the Government.
Do you qualify for the age pension?
The age pension is subject to two indexation changes per year.
The latest indexation update occurred on 20 September.
Find out how much you can have in retirement assets and still get a pension under the new rules.
