Increasing living costs and changes to the age pension mean Australian couples will require more than $100,000 in additional savings for a comfortable retirement, according to the Association of Superannuation Funds of Australia (ASFA).
“ASFA now estimates that Australians will need a super balance at retirement of $640,000 for a couple and $545,000 for a single, an increase of $130,000 and $115,000 respectively from previous estimates,” the association said following the release of its most recent Retirement Standard.
The figures in the June quarter’s report noted a modest rise in the cost of living for retirees. Couples aged around 65 years now spend $58,784 a year, while singles spend $42,861 annually. This marks increases of 0.6 percent and 0.7 percent respectively on the previous quarter. Older retirees spent 0.8 percent more to live comfortably, while retirees living modestly spent 0.7 percent more.
Pauline Vamos, the ASFA’s chief executive, said retirement savings targets may increase further if the age pension eligibility age rises beyond the currently legislated level.
Ms. Vamos believes the compulsory rate of superannuation contributions should be increased from 9.5 percent to 12 percent as soon as possible to account for the additional savings retirees required. She has also urged Australian workers to consider making voluntary contributions to boost their superannuation balance.
“These are generally tax advantaged and the earlier you can put money away, the more you will benefit from the effects of compound interest,” she told the Independent Financial Adviser blog.
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