How much is enough?
If you think your dollars aren’t stretching as far as they once did, you’d be right.
New research shows that while inflation affects everybody, retirees are particularly hard-hit.
In fact the report from the Association of Superannuation Funds of Australia (ASFA) shows the cost of living for retirees has risen by more than 30% in the last decade1.
Power bill up, phone bill down
ASFA says since 2006, health costs have risen by 60%, with property rates and charges up 83%.
Electricity costs have more than doubled, and insurance is 70% more expensive.
It’s not all bad news. Clothing is 3% cheaper, and telephone and mobile costs have dropped 8%.
A modest income
According to ASFA’s research, a single retiree now needs an income of $24,250 annually to fund a modest lifestyle, up 33% since 2006.
A couple will need $34,855 combined, which is up 36% over the same timeframe.
The Consumer Price Index, which measures general rises in prices, has increased by just 28.6% since 2006.
International holidays are 16% more expensive, but ASFA warns that its ‘modest’ income estimates won’t fund a jet setting lifestyle; it’s only enough to support fairly basic activities like owning an older car and one or two short holidays near home each year.
ASFA says that to fund a ‘comfortable’ retirement, a couple who own their home will need a combined income of $59,971 a year.
A single retiree will need $43,665.
What’s comfortable? ASFA says its ‘comfortable’ income will be enough for retirees to afford a holiday each year, run a reasonable car, regularly eat out at restaurants and keep their home in good shape.
So how much super will you need to be comfortable in retirement? According to ASFA, the answer is less than you might think.
The magic number
ASFA’s experts have calculated that to fund a ‘comfortable’ retirement, a couple who own their home will need retirement savings of $640,000.
A single retiree will need a lump sum of $545,000 to pay for a comfortable lifestyle2.
If you’re not sure how big your nest egg will be at retirement, LGIAsuper’s retirement income calculator can help.
The calculator will work out your likely super balance at retirement, and estimate whether you’re on track to reach ASFA’s ‘comfortable’ standard.
You can also see how making extra contributions, like arranging salary sacrifice with your employer, can make a big change to the final balance of your LGIAsuper account.
1. Source: ASFA media release
2. Source: ASFA Retirement Standard 2017