Super Consumers Australia (SCA) research shows that a middle-income home owning Australian couple aged 57 only needs approximately $400,000 between them by the time they are 65.
SCA’s said its research challenged the Association of Super Funds Australia’s (ASFA) widely-used Retirement Standard in which retired couples aged 65-84 who own their own home would need to spend $64,771 for a comfortable retirement.
SCA director, Xavier O’Halloran, said: “You may have seen media reports that say you need one million dollars for a comfortable retirement. Our targets show this figure is misleading.”
On the lower end of SCA’s targets, those aged around 57 who lived by themselves would need to save $89,000 by age 65 if they wanted to spend $1,269 a fortnight. On the higher end, those in a couple would need to save $1,034,000 by 65 if they wanted to spend $3,077 a fortnight in retirement.
Source: SCA
“By drawing on data that shows what retirees actually spend, we’re hoping our new targets give working Australians a good rule of thumb so they can confidently plan for retirement,” O’Halloran said.
“We also want to give retirees the confidence to safely spend down their retirement income – with a better idea about whether they are over or under spending.”
The ASFA’s Retirement Standard had been challenged by the Productivity Commission as the figures represented “more than many people spend before retirement” and that they are “no more than an arbitrary benchmark that should be ignored in policymaking”.
SCA said accurate targets were important, citing the Retirement Income Review (RIR) which noted that meeting the ASFA Retirement Standard would require a “substantially lower standard of living during working life”.
The consumer organisation said the study was independent and not from a super fund or an industry group which it believed might have a vested interest in getting consumers to contribute more to super, a suspicion that had been raised by participants in the research.
