The cost of a comfortable retirement has hit a record high, according to the Association of Superannuation Funds of Australia (ASFA).
For homeowners aged 65 and over, a comfortable retirement now costs $76,505 per annum for couples and $54,240 for singles.
ASFA says this represents a 3.5% increase for couples and 3.6% for singles over the past 12 months.
By comparison, consumer inflation has lifted by 3.2%, indicating retirees have borne a greater increase in expenses than non-retirees.
ASFA said:
This underscores that retirees are experiencing stronger price pressures than the general population because they spend more of their budget on essential items that have risen the most.
ASFA defines a comfortable lifestyle as enough money to cover the basics plus top level private health insurance, many exercise and leisure activities, occasional restaurant meals, a domestic holiday every year, and an international trip every seven years.
ASFA created the Retirement Standard, which is Australia's definitive retirement budgeting guide, in 2004.
The Retirement Standard is updated every quarter for inflation.
Last week, ASFA released its September quarter estimates of how much retirement costs in Australia.
ASFA also publishes expense estimates for a modest lifestyle for both homeowners and renters.
ASFA defines a modest retirement as having basic private health insurance, a cheaper car, basic internet and mobile phone, infrequent exercise and leisure activities, few restaurant meals, and one Australian holiday per year.
According to the September quarter update, a modest retirement now costs $50,866 per year for couple homeowners.
For single homeowners, a modest lifestyle now costs $35,199 per annum.
For renters, a modest retirement now costs $67,125 annually for couples and $49,676 for singles.
Retirement is more expensive for renters because their housing costs are higher.
Why have retirement costs jumped to record levels?
ASFA CEO Mary Delahunty said prices for essential items have risen faster than other categories, creating a greater impact for retirees.
Retirees might be feeling the squeeze this Christmas because prices have risen fastest in the things they spend most on, like food, energy and health. Some older people may cut back on pricier gifts, travel and social occasions to stay on top of the basics.
However, thanks to superannuation, most Australian retirees are living with additional income beyond the Age Pension each month, which makes them more financially resilient, including at financially stressful times of the year like Christmas.
In the September quarter, the cost of eating out or ordering takeaway rose by 1.3%.
Property rates rose 6.3% and electricity prices increased 9%.
Domestic holidays and accommodation lifted 5.2% and audio, visual, and media services rose 9.3%.
What about superannuation?
The superannuation savings required to fund a comfortable retirement remained the same in the September quarter.
Homeowner couples need $690,000 in super and singles need $595,000 by age 67 to fund a comfortable lifestyle.
A modest retirement for homeowners requires just $100,000 in super for both couples and singles.
Renters need $385,000 (couples) or $340,000 (singles) in superannuation savings to fund a modest lifestyle.
As we reported in October, more Australian retirees are living mainly off their superannuation instead of the pension.
In its Retirement and Retirement Intentions report, the Australian Bureau of Statistics said:
Between 2014-15 and 2024-25, the proportion of retired people with superannuation as their main source of income has increased from 20% to 28%.
Australians born on or after 1 January 1957 become eligible for the pension at age 67.
The full pension, including both supplements, is $1,777 per fortnight (combined) for couples and $1,178.70 per fortnight for singles.
There are 4.5 million retirees aged over 45 in Australia today.
