Living expenses in retirement

What everyone needs and wants financially differs from person to person.

This blog is really just highlighting what the payment rates are for the full Australian Age Pension who are members of a couple or single versus what an association called the Association of Superannuation Funds of Australia (ASFA) thinks is needed as a total yearly living expenditure figure for a comfortable or a modest lifestyle for those aged 65-84 who are retired and own their own home.

Couples

Currently as at the time of writing 1st of April 2024, the full age pension for a couple is $841.40 per fortnight each which is $43,752.80 per annum combined if both members of the couple are eligible.

Latest research from the December quarter 2023 from the ASFA say that a couple who are wanting a comfortable lifestyle will need $72,148.19 per annum to spend on the cost of living whereas a couple who live a modest lifestyle may only need $46,994.28 per annum.

Singles

The full age pension for a single person is $1,116.30 per fortnight which is $29,023.80 per annum.

Latest research from the December quarter 2023 from the ASFA say that a single person who is wanting a comfortable lifestyle will need $51,278.30 per annum to spend on the cost of living whereas a modest lifestyle may only need $32,665.66 per annum.

Comfortable vs Modest

ASFA define “comfortable” with having a few extra things above the essentials like private health insurance, annual domestic holidays and an international trip every seven years.

For the full breakdown on what is included in these figures you can visit the link here.

ASFA define “modest” as just being an amount above the age pension to allow some level of basic health insurance plus spending on some social and leisure activities with families and friends.

Summary

As you can see there is a shortfall either way from what ASFA define as a comfortable and modest retirement annual expenditure amount versus what the age pension pays. However, I always stress to clients that this is just a basket of research from various Australian’s and every individual is different. For example, these figures include an annual expenditure amount for electricity whereas I have some clients who don’t spend anything on electricity as they have a good size solar panel system.

This is why it is important to do your own “budget” or calculation to determine what you need as an annual expenditure amount and work from there as a starting point.

There are then a few ways to meet the shortfall of what you may or may not get from the Centrelink Age Pension and that is to either work more or build your assets such as superannuation or other investments to help allow you to draw an income on top of the age pension to meet your needs.