Couples now need nearly $70,000 per year to achieve a comfortable retirement, while singles need around $50,000 according to an analysis from the ASFA Retirement Standard.
The latest report shows that the cost of funding a comfortable retirement has increase by 7.5 per cent in just 12 months due to the impact of high inflation on household budgets.
The retiree budgets of both couples and singles rose another 2.5 per cent in the last three months of 2022, with couples now needing $69,691 per year and singles $49,462 according to the analysis by ASFA.
“Unfortunately, Australians continue to face sharp price increases for essential goods and services,” said ASFA CEO, Dr Martin Fahy.
“Additionally, for retiree households, falling real wages have meant that the Age Pension payments have not benefitted from adjustments linked to wage increases.”
These ongoing pressures on retiree budgets have caused a related lift in the superannuation lump sums that ASFA estimates are needed, at age 67, to fund either a modest or comfortable retirement out to the age of 92.
The lump sum ASFA calculates is needed for a comfortable retirement assumes that wages will grow at a higher rate than CPI,.
However, over the last few years growth in prices has outstripped wages and thus an adjustment to the lump sum is required.
ASFA now calculates the lump sum needed for a comfortable single retirement has increased about nine per cent from $545,000 to $595,000, and about 7.8 per cent for a comfortable couple retirement from $640,000 to $690,000.
“While recent price increases have particularly impacted on the currently retired, the legislated 12 per cent SG (Superannuation Guarantee) will support the majority of Australians building adequate superannuation savings across their working lives to face future retirement costs with confidence,” said Dr Fahy.
Additionally, retirement budgets for those aged around 85 were up by around 2.3 per cent at the comfortable level and around 2.0 per cent at the modest level from the previous quarter.
The lump sum figures needed to achieve the Modest and Comfortable retirement standard calculated by ASFA assume that retirement occurs at age 67 and that the lump sum will be fully spent by age 92.