The price of retiring in Australia jumps as cost of living bites
For singles, the target has climbed from A$35,000 to A$630,000
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[MELBOURNE] The recommended nest egg for retired Australian homeowners has surged in the past six months as cost-of-living pressures add to the squeeze on pension balances.
Couples aged 67 and over now require A$730,000 (S$652,792) in pension savings for a comfortable retirement, according to a report released on Tuesday (Feb 24) by the Association of Superannuation Funds of Australia (ASFA), a A$40,000 leap from its September update. For singles, the target has climbed from A$35,000 to A$630,000.
The amounts, which assume retirees also receive a part government pension, have increased for the first time in three years, the report shows.
“The Age Pension has not kept pace with the actual cost increases retirees face, particularly for essential goods and services,” ASFA chief executive officer Mary Delahunty said. “This means retirees need higher super savings to maintain a comfortable lifestyle.”
Australia’s A$4.5 trillion superannuation system, which mandates employer contributions to workers’ retirement savings, ranked seventh globally in a pension index in October, with Singapore the only Asia-Pacific market ranking higher. Yet surveys repeatedly show Australians fear they won’t have enough money to retire comfortably.
Retirees’ cost-of-living pressures persist as the Reserve Bank of Australia became the first monetary authority to hike interest rates this year, citing stubborn inflation and a still-tight labour market. Traders are expecting another increase in the coming months after last week’s job data showed stronger-than-expected numbers.
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Still, ASFA said that superannuation balances are helping to offset inflationary pressures, thanks to cumulative growth of 35 per cent over the past three years amid strong equity markets.
“The good news is that Australians are reaching retirement with larger super balances than ever before,” Delahunty said. BLOOMBERG
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