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In just over three years the cost of a modest standard of living in retirement has increased by 8.8%, and for a comfortable retirement by 8.1%, according to the latest findings from the Westpac ASFA Retirement Standard released today.
Since the Westpac ASFA Retirement Standard commenced in 2004, the costs of basic budget items have generally risen the most - food costs increased by around 15% in total, while petrol prices rose by more than 30% in three years - resulting in a higher proportionate jump in costs for those on a modest budget compared to those on a comfortable budget.
The latest national figures for the June 2007 quarter reflect recent rises in retirement living costs, despite falls in the past two successive quarters. Food, transportation and health costs all rose significantly in the June quarter.
The June quarter 2007 saw retirees facing a 1.7% increase in the cost of food, a 2.1% increase in the cost of health services, and a 3.0% increase in transportation costs largely due to the 9.1% increase in petrol prices. Providing at least a partial offset to these price increases was a 0.4% fall in the cost of recreation goods and services. Domestic holidays fall in cost in the winter months.
As a result, a couple living comfortably in retirement would need to spend $48,374 a year while those seeking a 'modest' retirement lifestyle need to spend $26,154 a year (See Table 1 for budget details).
Table 1: National budgets for various households and living standards
| |
Modest lifestyle- single |
Modest lifestyle couple |
Comfortable lifestyle single |
Comfortable lifestyle couple |
| Housing – ongoing only |
$63.89 |
$66.08 |
$84.88 |
$87.06 |
| Energy |
$11.74 |
$13.98 |
$12.85 |
$15.09 |
| Food |
$64.53 |
$135.80 |
$128.00 |
$180.45 |
| Clothing |
$14.56 |
$25.12 |
$30.75 |
$56.07 |
| Household goods and services |
$49.77 |
$52.71 |
$88.45 |
$93.58 |
| Health |
$12.10 |
$22.79 |
$50.94 |
$100.18 |
| Transport |
$72.28 |
$73.08 |
$110.30 |
$110.10 |
| Leisure |
$43.81 |
$72.53 |
$140.15 |
$201.21 |
| Personal care |
$25.07 |
$39.50 |
$25.07 |
$39.50 |
| Gifts and/or alcohol and tobacco |
|
|
$21.73 |
$43.47 |
| Total per week |
$357.74 |
$501.59 |
$693.11 |
$927.72 |
| Total per year |
$18,654 |
$26,154 |
$36,141 |
$48,374 |
The figures in each case assume that the retiree(s) own their own home. The figures 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.
Retiree households on average have somewhat different spending patterns to the rest of the population. They generally own their own homes, and in the main do not spend much on education services. However, food, health, transportation and recreation spending form a large part of retiree budgets.
Increase in national cost figures since Westpac ASFA Retirement Standard began
In 2004, when the Westpac ASFA Retirement Standard was launched, a retiree couple on the comfortable budget had annual costs totalling $44,733 in the June quarter. Three years later they will have to find an additional $3,641 a year to maintain that standard of living.
The cost of a modest lifestyle in retirement for a couple in June 2004 was $24,049. In 2007 they require an extra $2,105 per year to stay at the same standard of living.
The Westpac ASFA Retirement Standard
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.
- Modest lifestyle in retirement
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:
Costs and summary figures for capital cities and certain major regions can be accessed via the Retirement Standard calculator on the Westpac website at www.westpac.com.au .
The full Westpac ASFA Retirement Standard research report can be downloaded from the ASFA website > click here.
Further information:
Ross Clare, ASFA Research Director on 02 9264 9300 or 0417 680 908
Gillian Tatt, ASFA Public Affairs Manager on 02 9264 9300 or 0413 593 568
Aman Ramrakha, Head of Technical Services, Westpac Financial Planning, 02 8253 6116 or 0400 475 312
Allison Davis, Media Relations BT Financial Group, 02 8253 2735 or 0419 746 655