--- title: When modest doesn't cut it description: Regular readers of our blog will be familiar with the work that the Association of Superannuation Funds of Australia (ASFA) does in producing quarterly estimates of just how much it cost to live in retirement. Tealey and I usually sit glued to our computer screens following the end of each quarter, eagerly awaiting on ASFA to release the latest figures for a modest and a comfortable retirement. However, things have taken a big change. image: https://blog.centrepointalliance.com.au/hubfs/2019/Images/RYD%20Blog%20Images/RYDBlog-20180607.jpg --- [![Realise-Your-Dream-Logo](https://blog.centrepointalliance.com.au/hs-fs/hubfs/Realise-Your-Dream-Logo.png?width=175&name=Realise-Your-Dream-Logo.png "Realise-Your-Dream-Logo")](https://blog.centrepointalliance.com.au/realiseyourdream) # Realise Your Dream ![](https://blog.centrepointalliance.com.au/hubfs/2019/Images/RYD%20Blog%20Images/RYDBlog-20180607.jpg) # When modest doesn't cut it By Peter Kelly on 7 June 2018 Regular readers of our blog will be familiar with the work that the Association of Superannuation Funds of Australia (ASFA) does in producing quarterly estimates of just how much it cost to live in retirement. Tealey and I usually sit glued to our computer screens following the end of each quarter, eagerly awaiting on ASFA to release the latest figures for a modest and a comfortable retirement. However, things have taken a big change.  Not only were the figures for the December 2017 quarter not released, but ASFA carried out some work to update of the methodology they use to determine their budgets. In fact, during 2017, ASFA commissioned consultants to review the current living patterns of older Australians to ensure the Retirement Standard remains relevant and reflects what is happening in contemporary Australia today. The March 2018 have now been released. The ASFA budgets for living expenses in retirement are very comprehensive and drill down so far as to factoring in the amount of soap used, petrol bought and bus fares paid for. The latest figures include allowances for things like subscriptions to streaming services like Netflix. While the budgets for a comfortable lifestyle have actually reduced since the September 2017 quarter for a those aged between 65 and 85, and marginally increased for those over the age of 85, significant changes have occurred in the cost of living for those singles and couples seeking to live a modest lifestyle. Firstly, the following table shows the budget for singles and couple seeking a comfortable lifestyle in retirement: | **Status** | **September 2017** | **March 2018** | | --- | --- | --- | | Single  (65 to 85) | $44,011 | $42,764 | | Couple (65 to 85) | $60,457 | $60,264 | |   |   |   | | Single (over 85) | $39,702 | $40,636 | | Couple (over 85) | $55,696 | $56,295 |   The most revealing changes in the budgets affect those living a modest lifestyle. A modest lifestyle is best described as a basic lifestyle where a person seeks to avoid poverty. It is more attuned to the lifestyle one could expect living on the Age Pension. The figures for a modest lifestyle are shown in the following table. I have included the full rate of Age Pension, plus supplements, to provide a comparison with the cost of a modest lifestyle: | **Status** | **September 2017** | **March 2018** | **Age Pension** | | --- | --- | --- | --- | | Single  (65 to 85) | $24,506 | $27,368 | $23,598 | | Couple (65 to 85) | $35,189 | $39,353 | $35,573 | |   |   |   |   | | Single (over 85) | $24,097 | $25,841 | $23,598 | | Couple (over 85) | $35,622 | $36,897 | $35,598 |   Note the considerable increase in the March 2018 figures over September 2017. Where the Age Pension was sufficient to support a modest lifestyle in September 2017, re-jigging the underlying budgets has resulted in a considerable shortfall if living on the Age Pension along. For older Australians whose only source of income is the Age Pension, and wishing to enjoy a modest lifestyle, living expenses will need to be supplemented from savings or from other sources. Whether you are seeking a modest or a comfortable in retirement, or indeed something more substantial, the figures produced by ASFA should be taken as a guide. At the end of the day, the type of lifestyle you enjoy will be dictated in many ways by financial resources you can employ to generate your retirement income. ASFA suggests that a couple who own their own home and have no debts will need around $640,000 in savings (probably held in super) if they wish to support a comfortable retirement. A single person will need in the vicinity of $545,000. On the other hand, a single or a couple who seek to enjoy a modest lifestyle will need around $70,000 in savings in order to supplement their age pension. Irrespective of our lifestyle aspirations, the financial side of planning for retirement can be confusing and in some cases, overwhelming. Having a good financial planner who can act as your retirement coach is a great place to start planning for the second half of your life. 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Copyright © 2021 Realise Your Dream ---   This is a publication of Alliance Wealth Pty Limited (AFSL 449221) and Professional Investment Services Pty Ltd (AFSL 234951), wholly owned subsidiaries of Centrepoint Alliance Ltd. **General Advice Warning** The information contained in this article is of a generally nature and does not take into account your particular objectives, financial situation or needs. You should therefore consider the appropriateness of the advice for your situation before acting on it. 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