Cost of retirement goes up over the September quarter

By

November 23 2020
Share

The cost of a comfortable retirement in Australia has gone up over the September quarter despite COVID-induced lifestyle changes, new research has revealed.

Cost of retirement goes up over the September quarter

Research by the Association of Superannuation Funds of Australia (ASFA) has shown that couples aged around 65 living a comfortable retirement needed to spend $62,083 per year, up 0.3 per cent, and singles $43,901, up 0.5 per cent on the previous quarter.

The increase from a year earlier was 1.8 per cent for couples and 1.6 per cent for singles.

“COVID-19 has had a substantial impact on Australia’s financial and economic conditions, but there has been a partial unwinding of both price increases and decreases that immediately flowed from the impact of the pandemic,” said ASFA CEO Dr Martin Fahy.

ASFA noted that retiree lifestyles were yet to return to normal as restrictions on travel and changes to entertainment and dining-out options had a significant short-term impact on retirement lifestyles.

During the September quarter, health insurance premiums remained unchanged but would have increased from 1 October by around 3 per cent for many retirees.

“Recent reductions in interest rates and dividends are having an impact on the financial position of many Australian retirees,” Dr Fahy said.

“Dramatic changes in our lifestyles had a big impact on demand and prices right across the economy, but for at least some categories of expenditure, there is a return to something closer to normal.”

Dr Fahy noted that the increase in the cost of retirement despite lifestyle changes means members who are currently still working require greater accumulation of superannuation during their working lives.

“For wage earners, the increases in costs in retirement have highlighted the need for the superannuation guarantee to move from 9.5 per cent to 12 per cent as legislated. Over the year to September 2020, official figures indicate that wages grew by only 1.4 per cent on average for the entire economy, and by only 1.3 per cent in the private sector. Over the September quarter, increases in wages in the private sector averaged just 0.1 per cent,” the ASFA statement read.

Increases in retirement costs are outstripping growth in wages and higher contributions are needed for future retirees to achieve the standard of living they want and deserve in retirement.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

Mortgage stress is easing — but the credit cycle’s next winners will be data‑led

Resources

There is $17.5 billion in lost and unclaimed super across ...

Retirement