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Association of Superannuation Funds of Australia

Cost of retirement continues to rise

Chris Morcom
Partner/Private Client Adviser
2 Jun 2014

The latest Association of Superannuation Funds of Australia (ASFA) Retirement Standard figures (March 2014) show an increase in the cost of living for retirees.

According to ASFA, the amount needed for couples that seek a “comfortable” retirement rose 0.3 percent to $57,817 per annum.[LK1]  Couples seeking a “modest” retirement lifestyle will need $33,509 per annum, up 0.5 percent from the previous quarter.

For singles, individuals seeking a “comfortable” retirement lifestyle will need $42,254 per annum and those seeking a “modest” retirement lifestyle will need $23,283.   The most significant contributors to this rise were increases in the costs associated with automotive fuel, medial & hospital services, and pharmaceutical services.

The lifestyles referred to above are defined by ASFA, and more information about the various levels of expenditure can be found here  

The full Age Pension is currently $33,126 for couples and $21,973 for singles, meaning the gap to a comfortable retirement is significant. Note this does not take into account the money an individual may require to meet the costs of aged care later in life.

All individuals should get advice so they can be sure they have enough money going into their retirement fund during their working years to fund the lifestyle they wish to have in retirement.

However, the key message from this data is not the quantum of funding required, but the fact that this amount continually rises. 

Everyone who plans to retire from work, or has retired from work, needs to ensure their assets can provide sufficient income to meet their needs in retirement…and can increase the amount of income over time.

An individual’s investment strategy needs to focus on providing a growing income stream over time. Putting all your money into “safe,” non-volatile investments such as term deposits at retirement will not cut it.

Spreading your money across different types of assets can provide individuals with growth in income over time, while also providing lower volatility of invested capital over shorter periods. Individuals should seek advice to ensure the spread of assets – the asset allocation – is appropriate based on an individual’s or couple’s goals and objectives.

Once your spread of assets has been decided, it’s important not to “set and forget” the strategy: it needs to be constantly reviewed and re-balanced back to the target asset spread.  Without doing so you could end up taking too much risk, lose the opportunity to crystalize some of your gains, and worse could impact the income generating capability of your assets over time.

At Hewison Private Wealth, we design and implement investment strategies to achieve each individual client’s goals and objectives.  We monitor our clients’ investment strategies and provide pro-active advice to re-balance investment portfolios, to ensure our clients’ strategies remain on track with the achievement of their goals. Please visit our website homepage for links to further information, or make a time to see one of our professional advisers.


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.