Retiring is now significantly more affordable for homeowners, according to Super Consumers Australia (SCA).
Often, it is advised that people need around a million dollars to live a comfortable retirement, but this figure is “misleading” and “grossly inflated,” said Xavier O’Halloran, director at SCA.
Borrowing data from the Australian Bureau of Statistics (ABS), SCA looked into how much retirees spend through its Retirement Income Review to address the uncertainties that come with retirement savings.
“Our goal is to develop trustworthy retirement targets that give people a solid ‘rule of thumb’ on
what they’ll need to save to maintain their standard of living in retirement. These targets are
designed to get people to engage with simple information and kickstart their retirement planning
journey.”
The research revealed that single homeowners aged 67 will only need an annual retirement income of $259,000 to sustain a fortnightly spend of $1,423. On the other hand, couple homeowners aged 67 will only need $369,000 to maintain a fortnightly spend of $2,115.
To retire a decade earlier at age 57, single and couple homeowners need $313,000 and $409,000 to afford a fortnightly spend of $1,654 and $2,385, respectively.
However, this applies only to homeowners, who make up 84% of retirees. Renters show high rates of financial hardship and income poverty. In fact, SCA reported that renters in retirement need more than just consumer guidance, with housing affordability the root cause of the problem for this group.
Last month, Downsizing.com.au revealed more senior citizens are opting to work later in life to meet the increasing cost of living as economic uncertainty looms over the nation. Figures have almost quadrupled in a decade, rising from 218,000 in December 2011 to 868,000 in December 2021.
This means over five million people aged 50 and above will still be active in the workforce by 2031.
“People chasing inappropriate targets can end up with a much lower standard of living if they over save or don’t spend down as much as they can afford in retirement,” O’Halloran said.
