Home » community » News » Navigating Retirement Costs with the Latest ASFA Retirement Standard

Navigating Retirement Costs with the Latest ASFA Retirement Standard

As you plan for retirement, understanding the financial requirements for your desired lifestyle is crucial. The ASFA Retirement Standard has been the go-to resource for exactly this purpose for 20 years, offering detailed guidance on the costs associated with modest and comfortable retirements. This standard not only helps individuals and couples plan financially but also adapts to economic changes, ensuring you can maintain a vital and connected lifestyle despite fluctuating expenses.

Definition of Modest vs Comfortable Retirement

The ASFA Retirement Standard outlines two primary lifestyle categories for retirees: modest and comfortable. A modest retirement provides for basics slightly above the Age Pension level, allowing you basic health insurance and limited social activities. In contrast, a comfortable retirement affords a higher standard of living, including comprehensive health insurance, regular leisure activities, and the ability to maintain connections through travel and technology. Your own idea of a modest vs a comfortable lifestyle in retirement may look very different to ASFA’s definition, but it does provide important context to their data.

Latest Data for Singles

As of the June 2024 quarter, singles require a superannuation balance of $595,000 to fund a comfortable lifestyle, with annual expenditures amounting to $52,085. For a modest lifestyle, $100,000 is needed, with yearly expenses at $33,134. These figures assume you own your home outright and are in good health, reflecting necessary expenditures to maintain your chosen lifestyle.

Latest Data for Couples

Couples aiming for a comfortable retirement need a superannuation balance of $690,000, facing annual expenses of $73,337. For a modest lifestyle, both individuals can manage with $100,000, spending $47,731 annually. Like singles, these figures presuppose homeownership and good health, accounting for expenses that support a vibrant and connected retirement.

Impact of Inflation on Retirement Costs

Naturally, inflation significantly impacts retirement costs. To combat inflation’s erosion of purchasing power, your retirement planning should include strategies to mitigate the rising costs of goods and services, ensuring investments and income streams are in a good position to mitigate inflationary pressures as time goes on.

Are you on track to achieve your ideal retirement lifestyle?

The latest ASFA Retirement Standard report underscores the importance of proactive financial planning for retirement. With clear distinctions between modest and comfortable lifestyles, and adjustments for inflation, the report provides a robust framework for you to estimate and prepare the necessary funds for your retirement years.

At McKinley Plowman, our Retirement Planning service helps numerous clients every year make the most of their financial position now to prepare for the retirement lifestyle they desire – taking proactive steps to grow and secure their wealth so they can enjoy it to the fullest. To find out how we can do the same for you, please don’t hesitate to contact us today on 08 9325 2411 (Perth), 08 9301 2200 (Joondalup), or via our website.

Click here for the latest ASFA retirement standard.

written by:

Aaron McCracken

Aaron has over twenty years of experience in the financial services industry working with large companies and small businesses across all aspects of financial planning. He has broad experience across superannuation (including self-managed superannuation), investments, estate planning and personal insurance, retirement planning and business succession planning.
Aaron is passionate about the value of professional, client-focused advice and enjoys working closely with clients to help them make smart decisions with their money, as well as aiding them to clarify and achieve their financial aspirations.