12-03-2025
Superannuation warning as new $73,000 retirement reality exposed
The amount of money Australians need to retire comfortably has increased slightly over the last 12 months, following a rough couple of years of high inflation. But new figures reveal pressures have finally started to ease.
The Association of Superannuation Funds of Australia (ASFA) found couples aged 65 now need $73,077 per year combined to achieve a comfortable retirement, while singles need $51,805. This assumes the retiree owns their own home outright.
The budgets for a modest retirement were basically unchanged at $47,470 for couples and $32,897 for singles.
The super body said the new figures highlighted that Aussies likely needed to top up their superannuation with voluntary contributions to ensure they achieve the kind of retirement they need.
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The cost of a comfortable lifestyle rose by around 1.3 per cent over the last 12 months, which was just over half of the Consumer Price Index of 2.4 per cent over the same period.
Retiree costs rose by 0.1 per cent in the December quarter, with falling electricity prices helping to keep costs low. Electricity prices fell 9.9 per cent in the quarter, largely driven by commonwealth energy rebates.
ASFA CEO Mary Delahunty said there had been a "substantial easing in price for the goods and services' that retirees purchase.'However, the last couple of years of high inflation are still weighing on their ability to fund a comfortable retirement,' she said.
Insurance costs rose 1.1 per cent, which was the weakest quarterly rise since June 2022, while food prices were up 3 per cent.
Domestic holiday travel and accommodation rose by 5.7 per cent due to increased demand.
The superannuation body calculated the superannuation lump sums needed for a comfortable retirement at age 67 were $690,000 for a couple and $595,000 for a single.
It's worth noting that Super Consumers has put this amount lower at $420,000 for a couple and $310,000 for a single to maintain their living standards in retirement, combined with the age pension.
Delahunty said recent strong investment returns were helping retirees and those planning for retirement to reach their desired retirement lifestyles, but warned topping up superannuation would be necessary.
'The most recent Retirement Standard budgets reinforce the fact that Australians need both compulsory superannuation and voluntary contributions which are preserved until retirement to have the sort of retirement they need and deserve,' Delahunty said.
Balanced super funds showed a typical return of at least 10.5 per cent in 2024, with some funds recording nearly 12 per cent.
SuperRatings found monthly returns turned negative in February, which marked the second negative monthly return for the financial year, as the risks of US President Donald Trump's tariffs loomed.
Despite the Reserve Bank cutting interest rates in February, both Australian and international share markets, which are key drivers of super fund returns, declined over the month.
'The impact of tariffs on China and potential flow on effects to the Australian economy in particular influenced Australian share expectations, offsetting any potential benefit from the reduction in interest rates,' the group said.
While markets are more turbulent, SuperRatings executive director Kirby Rappell said it was important for Aussies to remember that superannuation was about long-term outcomes.
