Retirees living in Sydney, without a debt-free home, need almost twice as much in superannuation to enjoy the same level of comfort in retirement, says the Association of Superannuation Funds of Australia (ASFA).
According to the latest ASFA Retirement Standard, for the December 2016 quarter, retirees who are renting need significantly more in savings to have the same standard of living.
ASFA CEO Dr Martin Fahy said single or couple retirees living in Sydney who don’t own a home were at a “distinct financial disadvantage”, needing between $1,045,000 and $1,166,000 to reach the ASFA ‘comfortable’ standard.
“This compares to $545,000 for a single and $640,000 for a couple who own their own home,” he said.
“For a single person renting privately in Sydney, around $320,000 is needed to support even a modest standard of living in retirement, with a couple needing around $450,000 to support a modest budget.”
Though the issue is not confined to Sydney. According to the ASFA figures retired couples renting in any Australian capital city need a superannuation balance at retirement of more than $1 million to reach the ‘comfortable’ standard.
Dr Fahy said that one in 12 Australians over the age of 65 live in private rental accommodation.
“Housing affordability and availability is a significant and increasing concern for many Australians and particularly impacts older Australians grappling with the private rental market,” he said.
“Compulsory superannuation contributions at 9.5 per cent fall well short of what is needed to support a comfortable standard of living in retirement for anyone renting privately.”
The ASFA Retirement Standard for the December 2016 quarter showed a 0.4% increase in the cost of a ‘comfortable’ standard of living for singles and a 0.3% increase for couples. The modest level increased 0.5% for singles and 0.4% for couples. ASFA says the increases in recent quarters reflects inflation, with CPI up 0.5% in the December quarter.