Rental retiree cost of living clears $1m
The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard update, released today, has revealed retirees who rent are at a major financial disadvantage.
The December 2016 quarter figures found Sydney retirees relying on the private rental market for accommodation would need more than $1 million in super savings, as would all retiree couples living in Australian capital cities. Single retirees renting outside Sydney slipped under the million-dollar indicator, the update said. ASFA chief executive Martin Fahy said whether single or in a couple, renting retirees in Sydney, that is, those without a debt-free family home, were at a distinct financial disadvantage and would need about $1.045 million and $1.166 million at retirement respectively to reach the ASFA comfortable standard. “This compares to $545,000 for a single and $640,000 for a couple who own their own home,” Fahy said. “For a single person renting privately in Sydney, around $320,000 is needed to support even a modest standard of living in retirement, with a couple needing around $450,000 to support a modest budget.” He highlighted that one in 12 Australians aged over 65 lived in private rentals. “Housing affordability and availability is a significant and increasing concern for many Australians and particularly impacts older Australians grappling with the private rental market,” he said. ASFA estimated a single retiree renting privately in a one bedroom unit in Sydney would need to spend $62,434 annually to be comfortable and a couple renting a two bedroom unit would need to spend $79,801. By comparison, the ASFA comfortable retirement standard annual budgets for homeowners in Sydney were around $43,300 for singles and $59,600 for couples. “All estimates assume people are enjoying reasonable heath, so any serious illness or disability makes the situation even more challenging, as does rental instability and associated costs,” Fahy noted. “Compulsory super contributions at 9.5 per cent fall well short of what is needed to support a comfortable standard of living in retirement for anyone renting privately.”
Contact Savvy Super today to find out if you are on track to be ready for your retirement.