Retirement Affordability Index March 2017

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Retirement Affordability Index

For far too long the many years in the life stage known as retirement has been treated as a ‘dead-end’ and the people who are in retirement as a big, beige homogenous blob, who demand a one-size-fits-all solution. 

Having written and published content for and about retirees for the past 17 years, the team at YourLifeChoices has become exceedingly frustrated by the inaccuracies inherent in this broad brush approach, particularly when related to projections for retirement income. The glaring omission to date has been the assumption that all retirees live in a home with no mortgage.

YourLifeChoices, in partnership with The Australia Institute, is excited to announce the inaugural Retirement Affordability Index™ – the only report that investigates the real cost of living in retirement for all retirement households in Australia.

The Retirement Affordability Index™ will now help you consider which retirement tribe best matches your situation, so you can compare your spending.

To help calculate the weekly, monthly and annual expenditure for each retirement tribe and to keep you abreast of changes in the cost of living, the Retirement Affordability Index™ will be updated every three months, following the release of CPI data.

And, in this inaugural issue of the Retirement Affordability Index™, we provide updates on increases to the Age Pension age, new pension rates, new income and asset thresholds for part Age Pensions and the changes to the Energy Supplement eligibility, as well as an investigation into the true value of a concession card.

You can also download a copy in PDF format.

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Total Comments: 10
  1. 0

    I found this index to be totally flawed in exactly the same way as the original model. It assumes one person lives for half the price of two. The assumption that your household ownership and maintenance costs halve is patently absurd. Some costs double- for example most holidays. You don’t take Rover to the vet and pay half the price and he isn’t suddenly eating half a meal. You don’t re-carpet half a room or pay the plumber on a per capita basis. etc, etc.

    • 0

      actually two people can live on not much more than one. It costs the same for two as one for caravan park sites, motels etc. Also it doesn’t cost more for 2 people in a car rather than one. Also if you ask for a spare plate you can share a meal in most places too. Why pay for 2 meals when you both eat half anyway?

    • 0

      Yep. …and where does anyone find $1.4m in a single superfund? Maybe the financial advisers that charge $300 an hour have forgotten what everyone else earns!

    • 0

      Two cannot live for ”not much more than one”. It costs twice as much to feed two people – sometimes more than twice as much if one has special dietary needs. Two people have two sets of health issues that impose costs for medications and treatments. Two people can’t wear one person’s clothing! One person may be content with a small home unit, but a partner may regard a back yard and a shed as essential, thus requiring a larger home and higher maintenance, rates and insurance costs.

      My living costs are three times what they would be if I didn’t have a partner, because my partner has particular needs that impose very high costs.

      Another factor that isn’t considered is extended family. Children may not be dependent, but if they are in difficult circumstances and struggling they tend to impose heavy costs on retired parents. For example, a struggling widowed daughter I know sends his kids to his parents every school holidays. The parents have to feed them and pay for entertainment, and often buy them clothes because their mother is battling to afford basic necessities for her children. Having the children stay for school holidays imposes a need for a much larger home than would otherwise be required.

      I spend a considerable amount on my disabled grandson because his high care and therapy costs are making life very tough for his parents.

      Couples whose children live a long way away, or abroad, may incur high costs to visit and to accommodate their children’s visits.

      There are such a lot of variables that it’s impossible to say with any accuracy what a retired person’s needs might be, much less to estimate how much income or what assets are ”sufficient” for someone to have no need for assistance.

    • 0

      Agree Rainey & Teddy – absolutely absurd to say that 2 people can live on not much more than one. That’s the same as saying one person can live on a little less than what 2 people have. Total rubbish. Going from a couples pension to a single pension – costs are not suddenly reduced by 33%. I wish! Insurance, rates, rego, maintenance, etc still cost the same.

  2. 0

    Hi Teddy, Many thanks for your feedback. the index is based on actual household expenditure as measured by the Australian Bureau of statistics, so we do believe that these projections are correct for the different tribes, as there are no assumptions, just data on what people actually spend. Of course individuals and individual couples will vary from the average, but we do hope we have helped shine more light on the statistics for most retirees. warmest Kaye

  3. 0

    I assume that everybody is different. Collecting data like this is still helpful, however. I used the blank budget to update ours. I contacted our home insurers to give a loyalty discount and they obliged as they always do and took off a further $5 per month. I do my own research for providers of electricity and gas and seek the very best deal pitting one against the other. I do the same for private health cover. Having a budget is so important and revisiting it regularly and actively insisting on good deals saves hundreds per year. Some things on the provided budget were cheaper for us. Two cannot live as cheaply as one but maybe not double. Each person eats and uses water and power. Men eat a lot more than women usually. It is still good to collect all that information as it gives a good source to work from and compare etc.

  4. 0

    So depressing reading this article. We need something realistic and optimistic to look forward to. Anything less than $40K per year is poverty so I don’t know where the author found the word affluent to describe $34K p.a.

    • 0

      People often ask financial advisors “how much do I need in retirement”.

      Was listening to Paul Clithero the other day and he said it is up to you.

      You nominate the amount ‘you’ think you need each year and multiply that by 17 and that is the amount of savings you will need.

      Everyone has different wants…some can live quite happily on one amount someone on another. Some may want to travel, others stay in Australia and spend their time here bowling, golfing or whatever.

      We are all different. Like anything else people need to plan their retirement and I think this is where so many fail. They amble along never thinking that the day will come but it eventually will.

      If I had to give advice to someone younger I would say “think ahead, and plan”!



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