How much you will need for a comfortable retirement

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Get ready to save harder to fund your twilight years - the guidelines on how much we'll all need to retire around age 67 have gone up again due to rising cost-of-living expenses.

Retirees are feeling the pinch on their household budgets in the face of rising health, car and home insurance costs and eye-watering increases on the cost of everything from groceries to electricity - so much so that the Association of Superannuation Funds of Australia (ASFA) has revised its retirement savings guide to record new highs.

According to the latest ASFA Retirement Standard, couples will now need $72,148 per year to afford a comfortable retirement, and singles will need $51,278 per year. These figures are a 3.5% increase on guidelines issued a year ago.

how much money you will need for a comfortable retirement

The ASFA Comfortable Standard includes the cost of everyday expenses such as health, communication, clothing and household goods and reflects community expectations as well as changing lifestyles and spending habits. One domestic holiday each year and one international trip every seven years is factored in, along with occasional restaurant outings.

ASFA also outlines what people will need in their post-work years for a more modest retirement that includes basic health insurance, leisure and social activities with family and friends. Couples are now likely to need $46,994 per year for a modest retirement, and singles need to plan for $32,665 a year.

The figures for both 'comfortable' and 'modest' retirements assume people will own their own homes by the time they retire and are relatively healthy. ASFA is yet to issue guidelines for those still renting, but renters planning for retirement obviously need to factor in those additional costs.

If you'd rather get your head around a lump sum rather than think about what you'll need annually, for a comfortable retirement couples finishing up work at age 67 will need $690,000 and singles $595,000. To achieve a modest retirement, couples and singles are both estimated to need $100,000. ASFA's lump sum estimates take into account the Age Pension.

Just how much have everyday living expenses gone up?

Insurance prices rose 16.2% over the past 12 months, which ASFA says is the strongest annual rise since March 2001. Food prices are still going up, but they're not rising quite as fast as they have been (fruit and vegetable prices have actually fallen 0.2%). Electricity prices have gone up 6.9% over the past year.

"Fortunately, we are seeing price increases in the key categories that make up retiree budgets - home and content insurance, fruit and vegetables, fuel and electricity - begin to ease," Delahunty says.

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Joanna Tovia is a senior journalist at Money magazine. She is the former personal finance editor of The Daily Telegraph and author of Eco-Wise & Wealthy, a book about saving money by going green at home. She has worked as a journalist in the US, UK and Australia writing about money, travel, design and wellbeing. Connect with her on LinkedIn.
Comments
Yusuf Hussain
March 16, 2024 9.12am

Thank you for your informative article. It gave me the feeling of being adequately informed.