Following changes to the age pension and increases in the cost of living, Australian couples will need to save an extra $130,000 in super to achieve a comfortable retirement, according to the Association of Superannuation Funds of Australia.
The ASFA Retirement Standard, released on Tuesday, estimates that Australians will need a super balance at retirement of $640,000 for a couple and $545,000 for a single, an increase of $130,000 and $115,000 respectively.
The figures for the June quarter show a modest rise in the cost for living for retirees, with couples aged around 65 living a comfortable retirement needing to spend $58,784 per year and singles $42,861, an increase of 0.6 per cent and 0.7 per cent on the previous quarter.
ASFA chief executive Pauline Vamos said increasing cost pressures, greater life expectancy and the recently legislated changes to the age pension test have all had an impact on the estimated savings that Australians will need to live a comfortable retirement.
"In particular, adjustments to the taper rate and thresholds for the assets test will impact how people plan to fund their retirement,” said Ms Vamos.
“While some individuals with relatively low retirement savings will receive a small increase in their age pension after 1 January 2017, others will receive a lower age pension, or none at all, until they run down their superannuation.”
As a result many individuals and couples will require higher levels of private savings for a comfortable standard of living in retirement, she said.
"If there are further increases to the eligibility age for the age pension beyond what is already legislated and a lower indexation factor is applied to future increases in the age pension, those retirement savings targets will [need to] increase further," Ms Vamos said.
According to ASFA, the most significant price increases for retirees this quarter were automotive fuel, increasing by 12.2 per cent and medical and hospital services, rising by 4.5 per cent.
"Given the increasing level of super savings that the average Australian will require at retirement, ASFA considers that there is a strong case to increase the compulsory rate of superannuation contributions to 12 per cent of wages as soon as possible,” said Ms Vamos.
She also urged individuals to make voluntary contributions.
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 21 Aug 2016Risks flagged with real estate appraisal valuesBy Miranda Brownlee
- 21 Aug 2016Lawyer challenges ATO view on two fund strategiesBy Miranda Brownlee
- 18 Aug 2017ATO locks in details, addresses panic on real-time reportingBy Katarina Taurian
- 18 Aug 2017Data feeds unreliable for new reporting, says mid-tierBy Miranda Brownlee
- 18 Aug 2017Tax component confusion spurs potential tax liabilitiesBy Miranda Brownlee
- 18 Aug 2017Contributions triple in June quarter, survey showsBy Staff Reporter
- view all
- ATO locks in details, addresses panic on real-time reporting
The tax office has addressed several points of confusion with the new events-based reporting regime, locked in key deadlines, and outlined w...read more
- Data feeds unreliable for new reporting, says mid-tier
With an estimated 20 per cent of SMSFs still encountering errors from data feeds, one mid-tier firm believes the ATO should allow SMSF pract...read more
- view all