State of super savings dire without voluntary boosts

According to the ASFA Retirement Standard, retirees experienced a slight increase in the cost of living in the June quarter.

The ASFA Retirement Standard June quarter figures show couples aged around 65 living a comfortable retirement need to spend $59,160 per year, while singles need to spend $43,062 – 0.4 per cent higher for both compared to the previous quarter. Budgets for older retirees (those aged 85 and over) increased by 0.1 per cent.

“The small increase in the cost of retirement over recent quarters reflects moderate growth in the overall consumer price index,” ASFA interim chief executive officer Jim Minto said.

“However, saving an adequate amount for retirement is likely to get harder rather than easier as governments respond to the ageing population by looking for ways for individuals to make greater private contributions to health and aged care. Low interest rates and subdued investment earnings more generally will also be factors.”

“In order to achieve a comfortable standard of living in retirement, an individual requires a minimum of around $545,000 and a couple around $645,000. However, less than 20 per cent of single people aged over 65 are able to support a standard of living at or above the ASFA comfortable level and only around 30 per cent of all couples are able to support a standard of living at that level.”

The AFSA also issued a downwards revision on the assumed long-term nominal investment return from 7 per cent to 6 per cent a year. It reduced the assumed growth in future community living standards from 3.75 per cent to 2.75 per cent a year, in line with recent subdued average wages growth in Australia.

“ASFA advocates a goal of at least 50 per cent of retirees living at the comfortable standard by 2050. This is not achievable on the basis of current policy settings and individuals’ contributions. It will require individuals to make additional contributions and/or policy enhancements that boost contributions,” Mr Minto said.

“We encourage people to get in touch with their superannuation fund to find out what options are available, so that they have the best chance of living their post-work years free from major financial worries.”