Every quarter, the Association of Superannuation Funds of Australia (ASFA) releases an update to their Retirement Standard. First produced back in 2004, the Standard provides crucial information about Australian retirement costs.
When you are planning for your retirement, it is essential that you analyse how much you think you will regularly spend, and the information from ASFA can be helpful in providing you some details in line with current inflation.
Making sure you thoroughly assess your needs can help secure your financial security when you are no longer receiving a regular wage.
ASFA Retirement Standard
The ASFA website highlights how the Retirement Standard provides valuable details about average retirement costs. It states the Standard…
“serves as Australia’s trusted retirement savings companion and reflects evolving community expectations and spending habits to maintain health, vitality, and connection in retirement.”
“benchmarks the minimum annual cost of a comfortable or modest standard of living in retirement for singles and couples aged around 67, is reviewed regularly and updated quarterly in line with inflation.”
The most recent release is from the March 2022 quarter. The report breaks down weekly costs per expenditure type such as housing, food, goods and services, transport, health services and leisure.
Comfortable or modest
A key feature of the standard is the distinction between a comfortable retirement and a modest one. As you can imagine, a comfortable retirement lifestyle enables you to enjoy a variety of activities without having to watch every cent you spend.
Again, ASFA states:
“The comfortable retirement standard allows retirees to maintain a good standard of living in their post work years.
It accounts for daily essentials, such as groceries, transport and home repairs, as well as private health insurance, a range of exercise and leisure activities and the occasional restaurant meal.
Importantly, it enables retirees to remain connected to family and friends virtually – through technology – and in person, with an annual domestic trip and an international trip once every seven years.”
In comparison, the modest retirement budget is closer to that of someone solely receiving the Age Pension. It includes the essentials such as food, housing and general living expenses. Plus, it would cover costs for basic health insurance, but social activities are less frequent and it’s unlikely that international travel would be on the cards.
Both the comfortable and modest retirement budgets are based on the assumption that the retirees own their own home and are relatively healthy.
Everyone is different
While this data from ASFA is helpful and can give you some guidance on what to expect, it’s necessary to remember that everyone is different. And what the Standard deems as a regular expense within the standard might not even be relevant to you.
But you can use this as a tool to create your own retirement budget and focus on all the costs unique to you and your family.
Once you compile your retirement budget, if you have any concerns about your financial position, it can also help to talk to a professional financial adviser. Our team has the knowledge and expertise to help you implement a sound plan and make sure you will be able to live your dream retirement.
If you’d like to find out more, please contact us today.