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A COUPLE who retire today will need an annual income of $43,350 or significantly more in regional areas to live comfortably, according to a report released yesterday by Westpac Bank and the Association of Superannuation Funds of Australia.
A single person will need about $33,000, slightly more than most peoples' expectations of the minimum amount needed for retirement of about $30,000 a year, according to ASFA chief executive Philippa Smith.
She says to achieve the comfortable benchmark a couple will need a lump sum retirement payout of roughly $475,000. The average superannuation payout is $70,000 but this is because the superannuation guarantee policy is relatively young.
To live a more modest lifestyle a couple need about $23,550 a year or $16,930 for a single person.
A person on average weekly earnings will achieve the modest lifestyle benchmark through the superannuation guarantee system, but Mrs Smith said most middle income earners will find that level of income very restrictive.
People in regional areas where transport and food costs are often higher will need more. Mrs Smith says the benchmark used for a comfortable lifestyle is far from lavish, but will provide a good reality check for people nearing retirement.
She says the study is a world first but accords with what financial planners have used as a guide for most people.
"The extra expenditure allowed in the shift from a modest to comfortable standard adds a lot to enjoyment of retirement, in particular personal comfort, better health care and our ability to more fully participate in modern Australian society," Mrs Smith said.
The items allowed for in the comfortable budget include eating out from time to time; better quality clothes from department stores instead of discount chains; entertaining at home fortnightly (with a family roast) and private health insurance at the top rate.
They also include a better quality (but still mid-range second hand) car; a few alcoholic drinks, including wine, each week; being able to replace worn-out whitegoods with reasonable quality ones; some kitchen or bathroom renovations, or house modifications to accommodate a mild disability.
"The detailed budgets show that while the comfortable lifestyle allows for more activities, better personal care and home maintenance, it is not extravagant," she says.
"It's the difference between driving.a four-year-old car instead of an eightyear-old one, or having a glass - of wine a couple of times a week with dinner instead of a glass of soft drink..
"This research also provides further evidence to government and policymakers that a clear retirement income target needs to be set and acted on now."
Westpac's general manager of sales and service Paul Lilley says the age pension is an indication of what people can survive on, but most want to do more than just survive.
"We know that baby boomers and subsequent generations generally want to maintain very active and social lifestyles when they're retired. The (study) provides a clear and objective standard for Australians to gauge their own needs in retirement."
The budgets were drawn up by first examining what Australians spent their money on, then precisely costing the items. These initial budgets were tested on focus groups of retired people living comfortably, to determine what was appropriate and what was less relevant.