How Much Should Australians Save For Retirement? ASFA Reports 0.5% Drop In Retirement Costs For Q3

The Association of Superannuation Funds of Australia (ASFA) has announced positive news for retirees, revealing a 0.5% drop in the cost of funding a comfortable retirement in the September quarter, thanks to lower fuel prices and government energy rebates.

While retirees are seeing some financial relief, the ASFA Retirement Standard emphasizes the need for better access to quality financial counsel to help Australians manage rising retirement costs and plan for the future.

The ASFA retirement standard

According to the latest figures, couples aged 65 now need AU$73,031 a year for a comfortable retirement, while singles need AU$51,814. That translates to AU$595,000 in super savings for a single person and AU$690,000 for a couple if they retire at 67.

Retirees have outperformed the general population, with their retirement budgets increasing by 1.8% over the past year, compared to a 2.8% rise in the Consumer Price Index.

Over the last 20 years, the cost of a comfortable retirement has risen by 75%, with modest budgets nearly doubling. In comparison, the CPI increased by 66.4% during the same period. Factors like rising prices for essentials and the growing need for private health insurance in retirement have contributed to these cost increases.

For 20 years, the ASFA Retirement Standard has served as the industry benchmark by detailing the costs of essential items such as healthcare, communication, clothing, and household goods.

"It's great that in its 20th year of providing Australians with the definitive guide on how much money they need in retirement, the ASFA Retirement Standard can show some relief for retirees after a couple of tough years of rising costs of living," ASFA CEO Mary Delahunty said.

"For two decades the ASFA Retirement Standard has been a trusted compass for Australians, adapting to meet shifting community expectations and provide a clear roadmap to retirement security. As the peak association for super, we know that tools like the Standard give our members a helpful way to engage with Australians on their retirement journey."

Delahunty called this recent financial relief "a welcome holiday gift for retirees." However, she noted that the cost of retirement has risen faster than the general cost of living, highlighting the need for better financial advice to help Australians plan for retirement.

As research shows that only half of those surveyed have sought professional retirement advice, Delahunty stressed the importance of affordable financial guidance to help Australians make informed decisions.

"This is where access to affordable and accessible financial advice could make a world of difference, and why ASFA supports the Government's recent announcement of Tranche 2 of the Delivering Better Financial Outcomes reforms, which will help increase the supply of financial advice, thereby lowering the cost of high-quality advice. These reforms will help people make confident, informed decisions about their retirement," Delahunty added.