The magic annual sum you’ll now need for a comfortable retirement, according to ASFA

Self-funded retirees have been handed an early Christmas present — the cost of funding their life after work is actually falling following years of inflation-fuelled misery.

The Association of Superannuation Funds of Australia’s latest snapshot of the cost of living for those bankrolling their own retirement shows a 0.5 per cent fall in the three months to the end of September as the country’s inflation rate drops to lows not seen since early 2021.

“The easing in short-term retirement budget pressures will be a welcome holiday gift for retirees at this time of year,” chief executive Mary Delahunty said.

ASFA says to achieve what it terms a “comfortable” standard of living in retirement, couples aged about 65 now need $73,031 a year while singles need $51,814.

Under its measure, this equates to $595,000 in superannuation savings for a single person retiring at age 67, and $690,000 for a couple also retiring at age 67.

But those approaching retirement without 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.

ASFA said the fall in the September quarter was driven by factors such as lower fuel prices and Commonwealth and State government rebates aimed at lowering the cost of energy.

Those were offset by an annual 3.3 per cent surge in food prices, a near one per cent quarterly rise in dental services and a 2.8 per cent jump in premiums across house, home contents and motor vehicle insurance.

But, overall, retirees have done better over the past 12 months than the wider population, with retirement budgets increasing by 1.8 per cent over the year, compared with a lift in the consumer price index of 2.8 per cent.

Ms Delahunty said that while the short-term picture was positive, over the 20 years of ASFA Retirement Standard reports, increases in retiree budgets had outpaced those of the general population, due to the specific costs of people who have finished work.

Back in 2004, the annual cost of a comfortable retirement for a couple was $41,349, and $31,797 for a single.

The biggest cost burdens over two decades were water and sewerage (up 161 per cent), power (up 150 per cent), gas (up 122 per cent), petrol (up 113 per cent) and medical and hospital expenses (up 112 per cent).