Retirement just got more expensive for Aussies. Homeowner couples now need $76,505 a year to live comfortably, while singles need $54,240. Rising costs are making retirement harder to achieve for many.
Rising Living Costs: A Tougher Road Ahead for Retirees
The latest report from the Association of Superannuation Funds of Australia (ASFA) has raised serious concerns about retirement planning. Homeowner couples aged 65 and over now need $76,505 annually to live comfortably—an increase driven by a sharp rise in the cost of living. For singles, that number is $54,240 per year. These increases are above inflation, with costs in areas like food, energy, and healthcare rising more rapidly. ASFA CEO Mary Delahunty highlighted that these increases hit retirees hardest, as they tend to spend more on essential items that are seeing the steepest price hikes.
This puts many older Australians in a difficult spot, especially heading into the holiday season. With essential services like electricity, domestic travel, and even meals out getting more expensive, some retirees may have to adjust their budgets by cutting back on things like gifts, social outings, or travel plans. As Delahunty noted to Yahoo Finance , “Retirees might be feeling the squeeze this Christmas,” a sentiment that’s likely to resonate with many struggling to keep up with rising costs.
Comfortable vs. Modest: The Realities of Retirement
ASFA’s retirement standard defines a “comfortable” lifestyle as one that includes private health insurance, regular leisure activities, a reasonable car, occasional meals out, and the ability to take both domestic and international trips. For couples aged 65 and over, this means needing $76,505 per year, or $1,465.61 per week. Singles need $54,240 annually, which breaks down to $1,043.08 per week. In comparison, those hoping for a “modest” retirement, which would include fewer luxuries but still cover basic needs, would require $50,866 per year.
While the definition of a “comfortable” retirement may vary depending on individual circumstances, these numbers illustrate just how much more Australians need to save or adjust their plans to make ends meet in retirement. The increasing cost of essentials means that many retirees will be forced to tighten their belts, with limited room for luxuries or indulgence.
What Can You Do About It?
For those approaching retirement, now is the time to assess your financial situation and make any necessary adjustments. If the numbers are concerning, there are options to consider, such as working longer, cutting back on unnecessary expenses, or seeking financial advice. Many retirees are exploring ways to boost their superannuation or rely on part-time work to supplement their income.
One key factor in planning for retirement is ensuring that superannuation contributions are maximized, whether through salary sacrifice or other methods. Additionally, cutting down on debt before retirement and keeping a close eye on essential expenses can help ease financial strain.
