One of the biggest questions about super — will I have enough super in retirement? — has been changing.
Australians’ increased life expectancies, along with the numbers living into their nineties, have meant that questions about how spending requirements change when people age are becoming more prominent at both a policy level and in personal financial planning.
The ASFA Retirement Standard for Older Retirees shows as people age, their spending requirements change as they are often unable to engage in the same types of activities, and often require different types of care and support, which have different cost implications.
For figures relating to early retirement, read Will you have enough super in retirement?
Generally, the ASFA retirement standards show a core set of basic needs (housing, food and communications) that change little with age, and then expenses that increase (health and household services) and decrease (transport and leisure) with age, that nearly balance themselves out.
For the December Quarter, the budgets for modest lifestyles (better than a Government pension but fairly simple living) differed little between 70 year olds and 90 year olds. The annual guidelines for older retirees were $22,685 for a single (3.3% less) and $33,744 for a couple (0.1% less).
For the more comfortable lifestyle figures, the impact of decreased participation in travel and leisure was more significant. The estimates for 90 year olds were $37,944 for a single (10.9% less) and $53,194 for a couple (9.2% less).
It is important to note that these overall benchmarked costs of retirement exceed the full Age Pension, regardless of age or standard of living. The full break down of these estimates is available on the ASFA website.
So how much do you need?
If you take the relevant annual figure and multiply it by the number of years* you expect to be in retirement, you will get a rough idea of how much super you need to have when you retire.
* You can use the life tables for an idea of your life expectancy.