National figures released today for the Westpac ASFA Retirement Standard show the aggregate costs for a couple living comfortably in retirement were down by 0.2% in the June quarter 2010.
In general, a couple looking to achieve a comfortable retirement needs to spend $53,456 a year, while those seeking a ‘modest’ retirement lifestyle need to spend $30,382 a year (See Table 1 for budget details).
The decrease in costs over the quarter for retirees at around 0.2% compares to the 0.6% increase in the All Groups CPI. A significant contributor to the CPI was a 15.4% increase in the cost of tobacco after a 25% excise increase. The Retirement Standard budgets do not include any expenditure on tobacco.
For recreation, there was a fall of 1.8% in the quarter, the largest quarterly drop since the CPI series began in 1989. The cost of domestic holiday travel and accommodation fell by 6.0% with the cost of overseas holiday travel and accommodation falling by 1.9%. The cost of audio, visual and computing equipment fell by 6.3%. In most quarters there will be a difference between the increase in the All Groups CPI and the costs that retirees face. This is because retiree households on average have somewhat different spending patterns to the rest of the population.
Along with generally owning their own home outright (so cost increases for housing are less important for retirees), they don’t tend to spend much on education services. In contrast, food, health, transportation and recreation spending form a large part of retiree budgets. However, especially over the longer term, it is not unusual for the effects of the differences to largely cancel out.
Budgets for various households and living standards (June Quarter 2010)
| |
Modest lifestyle
– single |
Modest lifestyle
– couple |
Comfortable lifestyle
– single |
Comfortable lifestyle
– couple |
| Housing – ongoing only |
$54.08 |
$51.91 |
$62.68 |
$72.66 |
| Energy |
$28.63 |
$38.03 |
$29.06 |
$39.41 |
| Food |
$71.54 |
$148.19 |
$102.20 |
$183.95 |
| Clothing |
$17.72 |
$28.77 |
$38.36 |
$57.54 |
| Household goods and services |
$25.98 |
$35.22 |
$73.07 |
$85.61 |
| Health |
$33.76 |
$66.99 |
$66.99 |
$118.23 |
| Transport |
$88.95 |
$91.47 |
$132.55 |
$135.07 |
| Leisure |
$72.39 |
$107.85 |
$219.37 |
$300.62 |
| Communications |
$9.17 |
$16.06 |
$25.22 |
$32.09 |
| Total per week |
$4.2023 |
$582.66 |
$749.49 |
$1,025.18 |
| Total per year |
$20,973 |
$30,382 |
$39,081 |
$53,456 |
The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement. Single calculations are based on female figures. All calculations are weekly, unless otherwise stated.
Between the March quarter 2010 and the June quarter 2010 retirees received the benefit of a 0.3% decrease in the cost of food, mostly due to a fall in the cost of fruit and vegetables. Over the year to the June quarter food prices rose by a moderate 1.4% with the easing of the drought a contributing factor.
Also in this period, there was a 2.2% increase in the cost of health services largely due to an increase in private health insurance premiums.
There was a 0.7% increase in transportation costs mainly because of a 2.1% increase in petrol prices. The average price of unleaded petrol was around 130 cents a litre in the quarter but with regular fluctuations during and between each week of the quarter.
The Westpac ASFA Retirement Standard benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.
A better picture of retirement needs
The Westpac ASFA Retirement Standard has been revamped to give Australians a more comprehensive picture of how much they need to spend to support their retirement lifestyle. The Standard has been revised to reflect changes in living standards, new expectations of retirees and their evolving spending patterns. In particular, the budgets for Communications, Health, Energy, Clothing, Household goods and services, Recreation and Transport has been updated. For more details on the revamped Westpac ASFA Retirement Standard click here.
Modest vs Comfortable retirement lifestyle
Modest retirement lifestyle
Better than the Age Pension, but still only able to afford fairly basic activities.
Comfortable retirement lifestyle
Enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.
More information:
For further information, please contact:
Pauline Vamos, ASFA Chief Executive, 0433 169 342
Michelle Dunner, ASFA GM Marketing and Communications, 0412 704 016
Sarah O’Grady, ASFA Communications Co-ordinator, 0410 439 966
About ASFA
The Association of Superannuation Funds of Australia (ASFA) is the peak industry body for the entire superannuation sector. It is the only industry body that represents all types of superannuation funds, service providers and fund members.