SIGNIFICANT hikes to power, healthcare and food has resulted in Australians needing to stash even more savings to live a comfortable life in retirement, new figures have revealed.
The Retirement Standard — an superannuation industry benchmark used to determine how much Aussies need once they stop working — has reached record levels as household budgets continue to get squeezed.
The Association of Superannuation Funds of Australia’s latest calculations show in the 11 years the standard has been calculated on a quarterly basis, the budget for singles wanting a comfortable retirement has risen 23 per cent, while for couples it has climbed by 26 per cent.
During this time power costs have soared by 124 per cent, healthcare by 60 per cent, property and charges by 83 per cent and food by 24 per cent, while the Consumer Price Index climbed by 28.6 per cent.
For singles who own their home outright and are relatively healthy they will now require $43,665 per year to achieve a comfortable lifestyle while couples will need $59,971 — a climb of 0.3 per cent on the previous quarter.
ASFA’s chief executive officer Dr Martin Fahy said the looming shortfall for many people means they must take action now.
“For us it’s a call to action to move from 9.5 per cent to 12 per cent for the superannuation guarantee (SG) calculations,’’ he said.
“Retirement standard costs are running ahead of the CPI costs.
“Staying in the workforce longer as you transition into retirement is going to be healthier for you and financially beneficial for you.”
The SG is scheduled to climb in increments and reach 12 per cent by July 2025.
Over the last decade the maximum aged pension has increased in real terms by 70 per cent for a single person and 54 per cent for a couple however, it started from a low base experts said.
Australian Super’s group executive of membership Paul Schroder said despite the amount needed in super continuing to climb “people shouldn’t panic.”
“This is a trigger for people to have a look at their super balance but the government needs to do something … public policy needs to change,’’ he said.
“People should choose a fund that earns them more money, consolidate their accounts, contribute more, check they are not paying unnecessary insurance and continue their super into retirement.”
He said drawing an income from super is much more effective than taking out a lump sum.
In a report issued by HSBC called Shifting Sands yesterday (Sun) Australians are more worried about their retirement than those in 16 other countries — only 21 per cent believe they will have a comfortable retirement.