REVEALED: How much a 'comfortable' retirement costs
THE cost of living in retirement is on the rise, with predictions that singles need at least $545,000 in savings and couples around $640,000 in order to live a 'comfortable' lifestyle.
However, those figures relate only to household expenditure and are based on retirees who own their own home, meaning the figures would be dramatically higher for those that do not own their own property.
According to the Association of Superannuation Funds of Australia (ASFA), the rise in the cost of living a comfortable life in retirement actually outpaced inflation in the September quarter.
The ASFA said couples aged around 65 who wanted to live a 'comfortable' retirement needed to spend $59,619 per year and singles $43,372 - 0.8% higher for both compared to the previous quarter.
Budgets for older retirees (those aged 85 and over) increased even further, by 0.9%.
These increases outpaced the Consumer Price Index (CPI) which rose 0.7% in the September 2016 quarter, according to the latest Australian Bureau of Statistics figures.
The most significant price rises were for fruit (+19.5%), vegetables (+5.9%), electricity (+5.4%) and property rates and charges (+4.0%).
The most significant offsetting price falls were automotive fuel (-2.9%) and telecommunication equipment and services (-2.5%).
ASFA CEO Dr Martin Fahy said: "The increase in cost of living in retirement highlights the need for saving an adequate amount for retirement.
"In order to achieve a comfortable standard of living in retirement, an individual requires a minimum of around $545,000 and a couple around $640,000."
Currently, less than 20% of single people aged more than 65 are able to support a standard of living at or above the ASFA 'comfortable level'. Only around 30% of all couples are able to support a standard of living at that level.
Dr Fahy said the percentages would be lifted to 50% or more of retirees, provided the rate of compulsory contributions rose to 12% and individuals made voluntary contributions.
In calculating the lump sums needed, ASFA has revised downwards its previously assumed long-term nominal investment return from 7% a year to 6% a year, while at the same time reducing the assumed growth in future community living standards from 3.75% to 2.75% a year, in line with recent subdued average wages growth in Australia.
The availability of pensioner concessions and discounts is very important for many retirees, helping them to meet what are often substantial fixed or largely unavoidable costs in retirement.
For instance, in NSW, a pensioner concession card is estimated to save retirees about $1,470 a year, according to ASFA calculations.
The sum includes a $630 reduction in water, sewerage and stormwater charges, a $300 discount on car registration, $250 discount on council rates, $235 discount on electricity and a $55 discount on the pensioner's driver's licence fee.
A Telstra fixed line customer can also get up to $180 a year in discounts on call and access charges.