Retirement costs on the increase

The costs for a couple who wish to live ‘comfortably’ in retirement increased by 0.6 per cent in the December quarter of 2007, according to figures released today by Westpac and the Association of Superannuation Funds of Australia (ASFA).

‘Comfortable’ living is defined as “enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of things [including] household goods, private health insurance … [and some] travel”.

The news is no better for those seeking a ‘modest’ lifestyle, defined as above the age pension but still only sufficient for basic activities, with the cost of living increasing 0.9 per cent in the same period.

“It is important that Australians understand the level of income they may need in retirement to pay for the daily cost of living,” ASFA chief executive officer Pauline Vamos said.

The figures show that while the price of food, which can account for up to one-third of the household budget of retirees, has fallen slightly, this has not led to an overall fall in the cost of living.

Transportation costs were up by 2.4 per cent in the quarter and fuel prices up by 7.3 per cent, the figures showed.

According to the Westpac/ASFA data, a couple living comfortably in retirement would need to spend $48,962 annually, while those seeking a ‘modest’ retirement lifestyle would require $26,531.

“Long-term saving through superannuation, in combination with the age pension, is the answer for many to ensure they have the type of retirement that they expect,” Vamos said.