219th Monthly Edition March 2024 - The Cost Of Living In Retirement
Good morning Fellow members,
If you plan to keep enjoying your current lifestyle when you retire, it's generally suggested that, if you own your own home, you'll need to save enough to provide you with at least 70% of your current annual income.
For the majority of The FIRM's members, this was considered two decades ago, prior to retirement, allowing them to now unwind and delight in their enhanced property portfolio tailored for them.
The full Age Pension, if you're eligible, can provide you with $28,514 per year for a single income ($1,096.70 per fortnight - maximum basic rate including supplements). Read more on Services Australia's website.
However, research by the Association of Superannuation Funds of Australia (ASFA) indicates that relying solely on the Age Pension will not be enough for a comfortable retirement.
How much do you need to retire?
Most people want a comfortable retirement - whatever that looks like for them.
While this will mean different things to different people, everyone wants to be able to afford a good standard of living, with enough to spend on things like leisure activities, private health insurance and household goods.
Comfortable retirement around age 67
According to the Association of Superannuation Funds of Australia (ASFA), to achieve a comfortable retirement age of around 67, you need:
Single
$51,278.30 per year
Couple
$72,148.19 per year
On a fortnightly basis, a single person needs roughly $1,954.57, while a couple needs around $2,749.80 for a comfortable retirement.
A modest retirement, which allows for only basic activities although is better than relying only on the Age Pension, is estimated at $32,665.66 for singles per year, and $46,994.28 for couples.
Compare different lifestyles in retirement
The below table is based on ASFA research for retirees aged around 67.
It shows the expected lifestyles for a comfortable retirement, modest retirement and retirement relying on the Age Pension alone, per year.
The Age Pension annual amounts are approximate, based on maximum fortnightly rates, including supplements, as determined by Services Australia.
Compare the different lifestyles in retirement
| Comfortable retirement | Modest retirement | Age Pension | |
|---|---|---|---|
Single | $51,278.30 | $32,665.66 | $28,514 |
| Couple | $72,148.19 | $46,994.28 | $42,988 |
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Health care and food |
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| Holidays and leisure |
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Car |
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As you get older, the budgets change
It's likely you'll need less money later in retirement.
This may be because you're no longer raising a family, paying tax on your income, making super contributions or paying off a home. Your priorities and requirements can also change as you age as you may spend more on assistance in or outside the home and medical expenses.
For people 85 and above, ASFA estimates the below amounts are required for a comfortable retirement3:
Single
$48,074.77 per year
Couple
$66,455.12 per year
On a fortnightly basis, a single person needs roughly $1,814.90 while a couple needs around $2,513.30 for a comfortable retirement.
The annual cost for a modest standard of living at 85 years old is $30,417.12 for singles and $43,523.83 for couples.
There you have it for another month!
Stay tuned for an exciting new announcement for The FIRM International Cruise Line's next step closer.
Kindest regards,
John
