Seniors breathe sigh of relief as cost pressures ease to afford a comfortable retirement, says ASFA

Some seniors may still be feeling the financial strain, even as cost-of-living pressures abate, but most can hopefully breathe a sigh of relief now that the worst appears to be over.

Those edging closer to retirement and planning to enjoy a so-called “comfortable” standard of living when they give up the daily grind will also be glad to hear their superannuation savings may stretch a little further.

The Association of Superannuation Funds of Australia’s latest snapshot of the cost of living in retirement shows funding a comfortable lifestyle rose by about 1.3 per cent in 2024 — just over half of the consumer price index increase of 2.4 per cent over the same period.

Its retirement standard index shows that a home-owning couple aged about 65 now needs $73,077 a year (or around $1400 a week) to afford a comfortable standard of living.

It’s now $51,805 a year (or $996 a week) for singles, after both retiree budgets rose by 0.1 per cent in the December quarter as energy rebates helped to offset price increases elsewhere.

For comparison, from Thursday increases to Centrelink’s full age pension will take payments to $1149 a fortnight for a single and $1732.20 for a couple.

ASFA has been publishing the index for the past 20 years.

Those approaching retirement without any of these magic numbers in their nest egg shouldn’t panic.

The figures often work in conjunction with supplemental income through a part-pension from Centrelink, and financial advisers also say it’s important to remember that annual spending falls as retirees get older.

The cost of a comfortable retirement includes top-level health insurance, fast internet and streaming services, an above-average car, regular leisure activities, occasional restaurant meals, regular wardrobe updates, home repairs or upgrades, annual domestic travel and an overseas trip every seven years.

The budgets for a modest level of retirement were basically unchanged — at $47,470 a year (or $910 a week) for couples and $32,897 a year (or $630 a week) for singles.

For over-85s, a comfortable retirement will cost couples $67,714 a year while it’s $48,971 for singles.

There’s relatively little difference in expenses between singles and couples for such things as home insurance, council rates, water charges and power, but singles save a bundle on the extra cost of leisure activities, food, health insurance and clothing and footwear.

“The good news for retirees from the latest retirement standard is there has been a substantial easing in price increases for the goods and services they purchase,” said ASFA chief executive Mary Delahunty.

“However, the last couple of years of high inflation are still weighing on their ability to fund a comfortable retirement.”

ASFA said a 5.7 per cent hike in domestic holiday travel and accommodation expenses and a 1.1 per cent rise in home and vehicle insurance added to the cost of retirement in the December quarter. Food price increases eased slightly to 3 per cent over 2024 and beer and spirits rose just over 1 per cent.

The cost of medicines dropped 1.6 per cent as more seniors were captured under subsidies for PBS-listed scripts.

But retirees managed to make up some of the shortfall through strong investment returns. Balanced superannuation fund options showed a typical return of at least 10.5 per cent in 2024, with some funds recording nearly 12 per cent. Returns for accounts in the retirement phase were even higher, ASFA said.

“(But) the most recent retirement standard budgets reinforce the fact that Australians need both compulsory superannuation and voluntary contributions which are preserved until retirement to have the sort of retirement they need and deserve,” Ms Delahunty said.