What does a Comfortable Retirement actually cost?

2019-06-18
Retirement should be about having more options - so here is some suggestions about what that looks like financially. Retirement should be about having more options - so here is some suggestions about what that looks like financially.

Want to know if you'll be financially comfortable in retirement?

Well, first you need to have a standard of what's comfortable and what's, well ... a modest standard of living.

Thankfully, an annual assessment run by the ASFA can help you start your thinking about what you want to achieve in your retirement.

Then we can help you get there.

Jump Ahead

The ASFA Benchmarks the annual budget needed by the average (relatively healthy) Australian homeowner over 65, to fund their retirement lifestyle as either one of the below.

The difference between modest and comfortable

  • A Modest retirement lifestyle is considered better than the Age Pension, but still only able to afford fairly basic activities.
  • A Comfortable retirement lifestyle enables 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 such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.
ASFA Retirement Standard benchmark is updated to keep pace with the effect of inflation and provide a sample budget of what singles and couples would need to spend to support their level of retirement lifestyle.

Annual budget needed to have either a modest or comfortable standard of living in retirement

(As at Dec 18)

ASFA Retirement Benchmark

Annual Income Needed in Retirement

 SingleCouple
Modest lifestyle $27,648 $39,775
Comfortable lifestyle $43,317 $60,977

The weekly budget of either a modest or comfortable standard of living - for Singles

(As at Dec 18)

Singles breakdown- by Weekly spend
 Modest lifestyleComfortable lifestyle
Housing - ongoing only $99.34 $116.33
Energy $37.80 $47.89
Food $89.92 $116.26
Clothing $20.36 $27.20
Household goods and services $33.49 $73.56
Health $48.14 $98.81
Transport $88.60 $144.60
Leisure $93.06 $181.46
Communications $18.96 $23.72
Total per week $529.66 $829.82
Total per year $27,648 $43,317

The Weekly budget of either a modest or comfortable standard of living - for Couples

(As at Dec 18)

Couple breakdown - by Weekly spend
 Modest lifestyleComfortable lifestyle
Housing - ongoing only $111.70 $121.61
Energy $50.77 $59.39
Food $166.70 $202.07
Clothing $38.69 $50.65
Household goods and services $39.29 $90.51
Health $92.85 $184.97
Transport $94.62 $156.87
Leisure $145.98 $271.20
Communications $21.36 $30.87
Total per week $761.97 $1,168.13
Total per year $39,775 $60,977

Why is this important again?
We're all becoming increasingly responsible for our own retirement

Our clients in the pre-retirement phase tell us, 'they're concerned with being able to maintain their lifestyle in retirement and still be in a strong position to deal with unexpected costs including increasing health cares costs and age care costs too.'

  • Many of them are still trying to navigate the emotional and financial risks of being 'The Bank of Mum and Dad'
  • A growing number of retirees now find themselves having to become active parents again and raise their own grandchildren because their own adult children are no longer able to parent.
  • Still, tragically for others, they find themselves part of 1 of the 31 Australian Families who lose an income producing parent, every day, through an unexpected death.

Download our Free eGuide # 31 Families Lose a Parent Every Day

The problem of predicting the future and a comfortable retirement.

  • Clearly, people do not want to replicate the lifestyle standards of their parents and grandparents in their own retirement.
  • It's difficult to predict how living standards will evolve in the next 20-40 years in terms of what we can all expect to afford.
  • The growing impact of the Gig Economy on retirement savings where people are working for short term contracts with larger gaps in between jobs and potentially reduced consistency in contributions into Super.
  • Along with broken work patterns of Carers, Stay-at-Home-Parents and intermittent work history of many women, we all need a plan to create a better future.
The World Economic Forum in a report of June 2019 stressed, 'retirees in many countries, including Australia can expect to live past their retirement savings by almost a decade, with women the most at risk.'

Need to do some more thinking about this?

So now you have a good start of what it would cost each year to be able to fund two very different levels of retirement.

  • Here's a link to the governments SmartMoney website Retirement Calculator so you can begin to see what your options may be.

Now retirement and money is a complex combination - and at the mercy of the up and down interest rates, share market performance and even government changes to the Superannuation laws.

With this in mind, you can give yourself the best possible future by starting to learn about your options now and putting a plan in place to help get you there.

Contact us today here to see if we're the type of people you'd like to work with.
Drew Browne

Drew specialises in helping people protect and provide for what matters most in their lives. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His company Sapience Financial and Investment Services is committed to using business solutions for good in the community, and in 2015 certified as a B Corp. In 2017 Drew was recognised in the inaugural Australian Westpac Businesses of Tomorrow national awards. Drew writes for successful Small Business Owners and Entrepreneurs at Smallville, his blogs can be read on Amazon.com and you can connect with him on LinkedIn.

drew browne pic

Drew Browne

Sapience Founder & Director.
Simplifying Financial Complexity

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