Older retirees have lower cost of living: ASFA Retirement Standard

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ASFA Retirement Standard for Older RetireesAustralian retirees in their 90s need to spend slightly less to maintain their standard of living than younger retirees, but this is still more than can be afforded solely on the Age Pension, according to the Association of Superannuation Funds of Australia (ASFA).

This finding is contained in a report by ASFA, titled Spending patterns of older retirees, released alongside a new retirement standard, the ASFA Retirement Standard for Older Retirees.

This follows the ASFA Retirement Standard which “benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years.” The Retirement Standard standard calculates the cost of retirement for Australians in their 70s, with good health and who live in their own home. Whereas the ASFA Retirement Standard for Older Retirees takes account of the different costs faced by Australians aged in their 90s.

Some of the report’s key findings include:

  • More Australians can expect to live to at least 90
  • Older retirees spend more on support arrangements and medical expenses
  • Older retirees spend less on entertainment, holidays and transport

Overall retirees in their 90s require slightly less to fund a ‘modest’ standard of living. With a ‘comfortable’ standard of living “about 10 per cent lower in total” than for those aged 65-80.

However, despite this lower cost of living, the Age Pension alone is still not enough, “with the gap being very substantial when it comes to the comfortable standard of living.”

“As average life expectancies continue to increase, most older Australians will require both superannuation savings and financial support from government to accommodate their long-term retirement spending needs,” said ASFA CEO Ms Pauline Vamos.

“This will pose challenges for governments as they seek to put in place policies that provide financial support to this group, while working within the fiscal challenges that will arise as a result of the pool of retirees growing and the number of working Australians declining.”

ASFA also expects the new Retirement Standard for Older Retirees to help individuals and advisers in retirement planning.

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