Australia's benchmark retirement budgeting tool, the ASFA Retirement Standard, says a comfortable retirement costs $54,840 per year for singles and $77,375 per year for couples, if they own their own homes.
A modest retirement costs $35,503 per year for singles and $51,299 per year for couples, if they own their homes, or $50,055 per year for singles and $67,639 per year for couples if they rent.
However, a survey by Challenger Ltd (ASX: CGF) and YouGov shows Australians think retirement costs a lot more.
The survey of 2,015 Australians aged 60 years or older found that $70,398 was the minimum annual income considered required for singles.
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Australians fear running out of money in retirement
A common fear among retirees is that they will run out of money, which prompts them to become conservative with spending.
The survey showed 39% of retirees and 49% of pre-retirees fear running out of money in retirement.
Challenger's Customer CEO, Mandy Mannix, said:
Today's retirees are the first generation having built significant superannuation savings.
Yet, after decades of focusing on saving, many retirees find it surprisingly difficult to switch to spending once they retire.
Inflation a 'real concern' for older Australians today
The rising cost of living may be contributing to the fear of running out.
Two in three survey respondents cited inflation and costs of living as the most important things to plan for in retirement.
Mannix said:
The dollar value of a lump sum when you retire can seem like a lot of money, but it has to last a long time.
It can be hard to know how much to withdraw, knowing that the purchasing power of $1 million today can halve in 20 years' time.
The impact of inflation can be dramatic, and it is a real concern.
The survey showed that retirees' main goals were certainty that their money would last for life (72%), the ability to cover health and aged care costs (65%), and maintaining their existing lifestyles (53%).
Four out of five respondents said they would be happier with a guaranteed income, yet 59% had not heard of lifetime income streams.
Challenger sells retirement income products like annuities, which deliver guaranteed regular payments for life.
Mannix, said: "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."
The majority of Australia's 4.5 million retirees rely on the age pension to fund their lives.
The full pension, with both supplements, is $31,223 per year for singles and $47,070 for couples, subject to income and asset tests.
Here's how much you can own and earn in retirement while still qualifying for the pension.
