If you live a comfortable life now, will you still live a comfortable life in retirement? Or will yours be a ‘modest’ lifestyle? And what is a ‘comfortable’ life anyway?  And how much does it cost?

Whether you live a “comfortable” or “modest” lifestyle in retirement depends entirely on how much money you have.

But let’s look at it this way: how much money do you want to spend in retirement? How much do you need to spend? Do you know? Interestingly, many people don’t.

The Association of Superannuation Funds of Australia Limited, together with Westpac, has a retirement standard that benchmarks the annual spend of retired Australians for either a “comfortable” or “modest” lifestyle (see below for definitions). Updated quarterly to reflect inflation and retiree spending patterns, it details household budgets for singles and couples.

Figures released for the June quarter 2010, show a couple looking for a comfortable retirement lifestyle will spend $53,456 a year, against $30,382 for a modest lifestyle. (For March quarter, these figures were $53,565 and $30,400, respectively.)

A single retiree, living modestly, needed $20,973, while her more comfortably living counterpart spent $39,081. (Single calculations are based on female figures.)

The Westpac ASFA Retirement Standard benchmarks accounts for expenditure on:

• communications
• private health insurance
• energy
• clothing
• household goods and services
• ongoing housing costs
• recreation
• transport

According to figures, retirees spent more in the June quarter than they did for March on health services (up 2.2%, mainly due to an increase in private health insurance premiums) and transportation costs (up 0.7%, mainly due to a 2.1% increase in petrol prices), but less for many other sectors.

Recreation spending dropped 1.8% (the largest fall since 1989); domestic holiday travel costs and accommodation fell 6%, and overseas holiday costs fell 1.9%. Food spending was also down 0.3% (mostly due to lower fruit and veggie prices), however, over the year to the June quarter, figures show food prices rose by just 1.4%.

The largest cost for a comfortable retired couple in the June 2010 quarter was leisure, at $300.62, while the smallest was communications at $32.09.

For more information and a weekly break-down of costs, visit http://www.superannuation.asn.au/RS/default.aspx

Definitions

The standard defines:

• a “modest retirement lifestyle” as “better than the age pension, but still only able to afford fairly basic activities”
• a “comfortable” lifestyle enables “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”
• the figures assume retirees own their own home 

Sources: InvestorDaily; the Association of Superannuation Funds of Australia Ltd.

Tags: retirement income