Monday, September 01 2008
Each quarter, Westpac in conjunction with The Association of Superannuation Funds of Australia Limited (ASFA) publish an analysis of household budget requirements for retirees according to whether they are single of part of a couple and in terms of the lifestyle they hope to keep - Modest or Comfortable.
The latest figures released on the14th of August and relating to the March quarter 2008 - FOOD, PETROL DRIVE UP RETIREMENT COSTS - provides interesting reading for those planning for, approaching or in retirement. I find the information especially useful for those struggling to know how much disposable income they will actually need in retirement. The data suggests that rising food and petrol prices are placing an added burden on retirees.
The report suggests that a couple living in retirement needed to spend $49,502 a year to maintain a comfortable lifestyle while a couple with a more modest lifestyle needed $26,851.
Using our 5% sustainable draw down rate, a couple should aim to have $990,000 of financial assets (in today's dollars) to maintain a comfortable lifestyle in retirement or $537,000 to maintain a modest lifestyle.
Check out Scott Francis' Eureka Report article - Tap your super, but how much? for a more detailed discussion of sustainable draw down rates in retirement.