A study released by Challenger Ltd (ASX: CGF) shows Australians aged 60-plus believe the minimum annual income needed to live comfortably and happily in retirement, as a single person, is $70,398.
That is much higher than Australia's benchmark ASFA Retirement Standard.
The Standard says a comfortable retirement costs $54,840 per year for single homeowners and $77,375 per year for couples.
A modest retirement lifestyle costs $35,503 per year for single homeowners and $51,299 per year for couples.
For renters, a modest lifestyle costs $50,055 per year for singles and $67,639 for couples.
The disparity between modest retirement lifestyles for homeowners and renters highlights the advantages of homeownership.
The Standard is updated every quarter to reflect inflation and provide a realistic estimate of retirement costs in today's dollars.
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We worry about running out of money
Almost half of the women respondents and 43% of men said they were worried about running out of money in retirement, particularly as the cost of living in Australia rises. One in two pre-retirees also fear running out of money.
The study, developed in partnership with independent research provider YouGov, surveyed a nationally representative sample of 2,015 Australians aged 60-plus in February.
Having enough money to enjoy a happy retirement was a top priority for 44% of Australians, ranking behind physical health at 58%.
The research found that retirees' main savings goals were certainty that their money would last for life (72%), confidence to cover health and aged care costs (65%), and maintaining their current lifestyle (53%).
Challenger Customer CEO, Mandy Mannix, said:
The key is to have the confidence and certainty to relax in those golden years, knowing your money will last and you can afford to enjoy all retirement has to offer.
Challenger sells retirement income products, primarily annuities that deliver guaranteed regular payments in retirement for life.
However, the study showed 59% of Australians did not know about lifetime income streams as a financial strategy for retirement.
Mannix said a guaranteed regular income was a powerful way to ensure a happy and secure retirement.
A 'paycheck' means retirees know their needs are taken care of giving them greater confidence to spend on their activities and hobbies that give them purpose and happiness in retirement.
Mannix added that after decades of saving, many older Australians found it difficult to switch to spending once they stopped working.
How are Aussies funding their retirement today?
The age pension is the most common way of funding retirement, with superannuation in second place, but rapidly growing.
Australians born on or after 1 January 1957 are eligible for the pension at age 67, whether retired or not.
The full pension, with both supplements, is $31,223 per year for singles and $47,070 for couples.
The pension is subject to an assets test and an income test.
If you own or earn too much, you may only qualify for a part-pension, or no pension at all.
Find out how much you can own and earn in retirement while still qualifying for the pension here.
