Changes to the age pension and the increased cost of living mean Australian couples will need more than $100,000 in additional savings to ensure a comfortable retirement, says the Association of Superannuation Funds of Australia (ASFA).
According to the association's most recent ASFA Retirement Standard – for the June quarter – recent changes to the age pension mean retirees will fall short on the amount of savings needed to live comfortably in retirement.
"ASFA now estimates that Australians will need a super balance at retirement of $640,000 for a couple and $545,000 for a single, an increase of $130,000 and $115,000 respectively from previous estimates," a statement from the association said.
"The June quarter figures indicate a modest rise in the cost of living for retirees, with couples aged around 65 living a comfortable retirement needing to spend $58,784 per year and singles $42,861, a respective 0.6 per cent and 0.7 per cent increase on the previous quarter.
"Budgets for older retirees increased by 0.8 per cent at the comfortable level and by 0.7 per cent at the modest level," the ASFA statement said.
Commenting on the findings, ASFA chief executive Pauline Vamos said that if there are further changes to the age pension eligibility age beyond what is already legislated, retirement savings targets will need to increase further.
"Given the increasing level of super savings that the average Australian will require at retirement, ASFA considers that there is a strong case to increase the compulsory rate of superannuation contributions to 12 per cent of wages as soon as possible," Ms Vamos said.
"Additionally, many individuals may want to consider making voluntary contributions. These are generally tax advantaged and the earlier you can put money away, the more you will benefit from the effects of compound interest," she said.
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