The latest ASFA Retirement Standard has been published looking at the period ending 30th September 2012.
The latest figures suggest:
A modest lifestyle for a single person will cost $22,539 per annum
A comfortable lifestyle for a single person will cost $41,090 per annum
A modest lifestyle for a couple will cost $32,511 per annum
A comfortable lifestyle for a single person will cost $56,236 per annum
An interesting aspect to consider is the level of increase or inflation in these levels from one year to the next.
The increases for the past year have been:
A modest lifestyle for a single person - 2.65%
A comfortable lifestyle for a single person - 1.68%
A modest lifestyle for a couple - 2.34%
A comfortable lifestyle for a single person - 1.66%
The official Australian Bureau of Statistics data for Consumer Price Inflation (CPI) for the period ending the 30th of September 2012 saw prices increase by 2.0%.
The Retirement Standard data suggests that prices are rising faster than CPI for those living a modest lifestyle whilst those living more comfortably seeing prices rise less.
The ABS data suggests as much with two of the largest rises in prices over the past 12 months being in the area of health and housing (including electiricty & gas).
How to apply this data?
The cost of living in retirement differes from one household to the next but the retirement standard provides a useful benchmark to test your level of planned and real expenditure in retirement.
The other major use is to get a sense of rising costs in retirement and to plan accordingly?
How to plan to protect against inflation in retirement?
Unfortunately the firt major lesson is that investing all of your income producing assets in cash is unlikely to successfully fight inflation through 20 to 40 years of retirement. We all need to build in other asset classes that will help fight inflation. We believe a major component of these assets for Australians are dividending yielding company shares along with carefully structure fixed interest (bond) investments.
If you would like to knowmore about our approach please be in contact.
