How much it now costs for a comfortable retirement

The cost of a comfortable retirement has risen 7.7 per cent in 12 months, accelerating at a faster rate than overall inflation and driven higher by surging utilities and food prices.

A retiring couple now needs more than $70,000 a year and a single requires more than $50,000 annually, according to new figures from the Association of Superannuation Funds of Australia. The cost increase is larger than Australia’s CPI inflation, which rose 7 per cent for the 12 months to March 31.

The latest ASFA Retirement Standard shows seniors have been hit by big annual rises in energy costs (up 15.5 per cent), leisure activities such as holidays and restaurant meals (up 14 per cent) and food (up 8 per cent).

In the March quarter alone, medical and hospital services rose 4.2 per cent, insurance costs rose 3.5 per cent and fruit and vegetables rose 2.4 per cent.

ASFA chief executive Martin Fahy said retiree budgets put a larger proportion of money towards essential services such as food, energy and medical costs, “which each have increased significantly”. “Retiree budgets have been under substantial pressure for over 18 months,” Dr Fahy said.

ASFA says the annual budget for a comfortable retirement is a record $70,482 for a couple aged about 65 and $50,004 for a single. A “modest” retirement costs $45,808 for a couple and $31,785 for singles.

The calculations assume retirees draw down their super savings and receive a part-pension. ASFA says the lump sums now required at retirement are $595,000 for singles and $690,000 combined for couples.