Unlock Your Dream Retirement: Discover the New Magic Number for a Comfortable Future

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The cost of a comfortable retirement is higher than it’s ever been, according to the Association of Superannuation Funds of Australia (ASFA).

The peak body’s CEO, Mary Delahunty, said, fortunately, the average balance of superannuation accounts has also risen to a record high.

The average balance is sitting at $172,834 for nearly 18 million superannuation account holders over the age of 15. For those aged 65 to 69, the average balance is around $420,934.

“More Australians than ever before are reaching retirement with meaningful super behind them,” she said.

As Australians contemplate their golden years, many may find the financial requirements for a comfortable retirement appear daunting. Recent figures from the Association of Superannuation Funds of Australia (ASFA) highlight this challenge, revealing that a couple aged 65 and over, who own their home, will require approximately $76,505 annually to maintain a comfortable lifestyle. For a single retiree, the estimated annual need is around $54,240.

This financial benchmark has increased by 3.5% for couples and 3.6% for singles compared to last year, a reflection of the ever-climbing cost of living. Such statistics underscore the importance of planning and saving diligently for retirement, as these rising costs show no signs of abating.

There are many factors that influence how much money you’ll need, such as age pension eligibility, whether you own your home, and your living situation.

Most calculations consider a more modest budget option versus a more comfortable lifestyle, including things like overseas travel and subscriptions to streaming services.

According to ASFA, coupled homeowners 65 and over will need $76,505 each year to live comfortably in retirement.

For couples, this means amassing a combined sum of $432,000 to ensure they can meet these projected expenses without financial strain. As individuals and families navigate these realities, the figures serve as a reminder of the necessity to prepare thoroughly for the future.

A graphic detailing how much superannuation one needs to retire comfortably in Australia.

According to ASFA, coupled homeowners 65 and over will need $76,505 each year to live comfortably in retirement, while a single person will need around $54,240 each year. Source: SBS News

That’s an increase of 3.5 per cent and 3.6 per cent respectively compared to this time last year, and it’s directly connected to the rising cost of living.

The group estimated retirees over 85 who own their home would need less money, offering about $71,104 as a guide for a couple and $47,534 for a single person.

A separate estimate from Super Consumers Australia, a group that advocates for lower- and middle-income super consumers, suggests that a typical single homeowner will need around $322,000 in superannuation for a comfortable retirement.

Couples will need a combined $432,000.

Source: SBS News

In contrast, for those living a ‘modest lifestyle’, the estimated annual budget was approximately $20,000 lower, as they typically spend less on health insurance, cars, and take fewer holidays, among other expenses.

Experts say it may take even less in superannuation to have a secure retirement, especially if you own your own home.

Joey Moloney, the deputy director of the housing and economic security program at the Grattan Institute, previously told SBS News the real cost of retirement could be even lower, as retirees typically spend less once they stop working.

“When you look at people’s spending habits from pre-retirement to post-retirement, what you see is that people spend less in retirement and increasingly so as retirement goes on,” he said.

“Pensioners benefit from a bunch of discounts on council rates, electricity, medicines and other benefits that add up to an implicit income of thousands of dollars a year.”

Where have prices risen most?

In the September quarter alone, electricity prices have risen by 9 per cent.

Over the past twelve months, the increase is closer to 25 per cent.

Meanwhile, the cost of eating out has risen by around 1.3 per cent, while those staying in are paying 9.3 per cent more for media services.

Delahunty said the holidays will be a challenging time for many retirees because prices have risen fastest in the things they spend most on, like “food, energy and health”.

“Some older people may cut back on pricier gifts, travel and social occasions to stay on top of the basics,” she said.

“The challenge now is to keep strengthening the system so every Australian has the best possible chance of a comfortable, dignified retirement, not just at Christmas but all year round.”