Retiree's cost of living

Based upon the ASFA Retirement Standard a couple wanting a comfortable lifestyle in retirement will have to spend $57,195 pa.  A single seeking the same comfortable lifestyle in retirement will have to spend $41,830 pa.  

Similarly, a couple who only want a modest lifestyle in retirement will have to spend $33,120 pa.  A single seeking the same modest lifestyle in retirement will have to spend $23,032.

Putting this into perspective, assuming all commence retirement at age 65 and the pension account being drawndown at the minimum rate of 5%, then the necessary initial pension account balance will be:

•    $1,143,900 to produce a comfortable retirement for a couple
•    $836,000 to produce a comfortable retirement for a single
•    $662,400 to produce a modest retirement for a couple
•    $460,640 to produce a modest retirement for a single.

The account balances have been determined by dividing the annual lifestyle income amount by 5% and is provided merely to illustrate the initial balance required at the minimum drawdown rate.  This is probably a crude overestimate of the required initial pension account balance as it does not take into account the differential between earnings and inflation and it does not take into account the fact that capital will sooner or later be used to finance pension payments.

As SUPERCentral is not licensed to provide financial advice, the minimum balances stated above must not be taken as a recommendation or suggestion that the balances will be able to finance the relevant retirement lifestyle.

The annual amounts for the relevant retirement lifestyles are taken from the ASFA Retirement Standard for September 2013.