New data has confirmed inflation has caused the amount of money needed for a retirement nest egg to jump significantly, according to the Association of Superannuation Funds of Australia (ASFA).
Australia has experienced a huge price increase for basic necessities such as food, fuel and electricity in the past few months and that price surge has extended over to the cost of retirement – with older couples now needing an extra $50,000 in savings to be able to retire comfortably.
According to ASFA’s latest Retirement Standard report, expenses have also pushed up the amount of money needed to retire comfortably to $69,691 a year for a couple aged around 65 and $49,462 for a single.
The report said that the assets needed to achieve this level of income, through a combination of superannuation and the Age Pension, means a couple now requires $690,000 combined while a single needs $595,000.
During the final three months of 2022, retiree costs rose 2.5% which is above the official Consumer Price Index (CPI) inflation figure of 1.9%.
ASFA Chief Executive, Martin Fahy, told News Corp that retirees are chewing into their retirement budget in order to stay afloat.
“Food’s up by 9.2%, bread’s up 13.4[%], anything to do with imported oils and fats: 20%, electricity is up by 12%,” he said.
“In the face of inflation, we need to be saving for retirement.”
On Monday, pensions and other Government payments increased by 3.7% as part of their twice-yearly indexation to inflation and other data.
Dr Fahy said the increase in compulsory super contributions to 12% by mid-2025 would allow the majority of older Australians to have a comfortable retirement.
The median super balance for 60-64-year-olds is currently sitting at $181,000 for men and $139,000 for women. Average super balances are $358,000 and $288,000, respectively.
“It reinforces the need to save for retirement, the importance of the 12% and the importance of being able to continue to provide the safety net of the Age Pension,” he explained.
“If we haven’t got 12[%] I think we will have more and more people leaning on the Age Pension.”