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Australian retirees face accelerating price pressures

Couples now need nearly $70,000 per year to achieve a comfortable retirement, while singles need around $50,000 according to an analysis from the ASFA Retirement Standard.

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The latest report shows that the cost of funding a comfortable retirement has increase by 7.5 per cent in just 12 months due to the impact of high inflation on household budgets.

The retiree budgets of both couples and singles rose another 2.5 per cent in the last three months of 2022, with couples now needing $69,691 per year and singles $49,462 according to the analysis by ASFA.

“Unfortunately, Australians continue to face sharp price increases for essential goods and services,” said ASFA CEO, Dr Martin Fahy.

“Additionally, for retiree households, falling real wages have meant that the Age Pension payments have not benefitted from adjustments linked to wage increases.”

These ongoing pressures on retiree budgets have caused a related lift in the superannuation lump sums that ASFA estimates are needed, at age 67, to fund either a modest or comfortable retirement out to the age of 92.

The lump sum ASFA calculates is needed for a comfortable retirement assumes that wages will grow at a higher rate than CPI,.

However, over the last few years growth in prices has outstripped wages and thus an adjustment to the lump sum is required.

ASFA now calculates the lump sum needed for a comfortable single retirement has increased about nine per cent from $545,000 to $595,000, and about 7.8 per cent for a comfortable couple retirement from $640,000 to $690,000.

“While recent price increases have particularly impacted on the currently retired, the legislated 12 per cent SG (Superannuation Guarantee) will support the majority of Australians building adequate superannuation savings across their working lives to face future retirement costs with confidence,” said Dr Fahy.

Additionally, retirement budgets for those aged around 85 were up by around 2.3 per cent at the comfortable level and around 2.0 per cent at the modest level from the previous quarter.

The lump sum figures needed to achieve the Modest and Comfortable retirement standard calculated by ASFA assume that retirement occurs at age 67 and that the lump sum will be fully spent by age 92.

 

 

 

Keeli Cambourne
27 March 2023 
smsfadviser.com/
 
 

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David Forrest

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BEc (Acc), MBA, CPA, FFin

David has been in the Financial Services Industry for nearly 30 years. He was one of the founding Directors of the successful Financial Planning and Stockbroking Practice, Henderson Gregory Forrest, for a decade. Prior to that, he held senior roles in companies such as ING, KPMG Accountants and AMP. David was previously Chairman of OAMPS Superannuation Trustee Board and currently serves as an independent Board Director for several companies.

David’s extensive experience in all forms of superannuation, including Self Managed Super Funds (SMSF), Defined Benefit Funds, retirement funding through Account Based Pensions, stockbroking with a focus on Direct Share Investment, Taxation/Remuneration Planning, Centrelink, Aged Care and business management, equip him to advise expertly on all aspects of Financial Advice.

Those with a particular interest in superannuation/SMSFs, direct share investment, salary packaging or applying for the Centrelink Pension will find his knowledge and ability in formulating and implementing creative, logical and simple wealth creation strategies a valuable asset.

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David Forrest is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846

Michelle Forrest

Michelle Forrest

Business Finance Manager
B Bus (Acc), CPA

Michelle’s career has spanned across the Financial Services, Retirement Living and Aged Care industries working in the private sector, not for profit and more recently with the state government for over 20 years. Her experience extends to many facets of the financial services industry, having worked in superannuation administration, technical support and financial planning practice administration.

Commencing with AMP and subsequently working in commerce and accounting roles with companies such as Brambles, Adelaide Bank Retirement Services, ECH Inc and SA Health and Wellbeing, Michelle returns to financial services after working in practice financial management at Henderson Gregory Forrest. This wide range of experience from senior accounting and management roles has provided Michelle with a strong background in business administration.

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Jasmine has worked in the financial services industry for over 12 years in all areas of client administration, working with David since 2013.

Jasmine has extensive knowledge and experience in client service including implementation of advice, portfolio reporting, assisting with the establishment of Self Managed Super Funds (SMSFs), term deposit management and a long history of helping clients with their enquiries.

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Merrilyn has worked in the financial services industry for over 11 years in all areas of client administration, and is a new addition to our client services team, returning from Melbourne to join the team in June 2019.

Merrilyn has extensive knowledge and experience in client service including implementation of advice, managed fund administration, assisting with the establishment of Self Managed Super Funds (SMSFs) and process improvement for the previous practices she has worked with. Merrilyn’s experience with direct shares constitutes the other part of our administrative support for direct equity investments.

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