The Rising Cost of Retirement: Why Planning Matters More Than Ever

Retirement is meant to be a time of freedom, relaxation, and enjoyment after years of hard work. But for many Australians, the cost of maintaining even a modest lifestyle in retirement is climbing faster than expected — and it’s reshaping how we need to plan for our later years.

What the Latest ASFA Data Tells Us
According to the Association of Superannuation Funds of Australia (ASFA), the cost of a comfortable retirement has reached new highs. As of June 2025:

• A couple aged around 65 now needs $75,319 per year
• A single retiree requires $53,289 per year

Even a modest lifestyle, which covers basic needs without many extras, now costs:

• $48,184 for couples
• $33,386 for singles

These figures reflect the real-world expenses retirees face — and they’re rising.

What’s Driving the Increase?
Several key factors are pushing retirement costs higher:

1. Essential Living Costs
Private health insurance premiums rose by 3.7% — the steepest quarterly increase since 2018.

• Electricity prices surged by 8.1% this quarter alone, following a 16.3% spike previously.
• Fruit and vegetables are up 4.3%, and clothing and footwear by 2.6%.

These aren’t luxuries — they’re everyday essentials. For retirees on fixed incomes, these increases can quickly erode financial security.

2. Digital Connectivity
Today’s retirees are more tech-savvy than ever. Smartphones, streaming services, and high-speed internet are now considered essential.

ASFA’s updated Retirement Standard includes these costs:

• Couples spend around $58 per week on digital services at the comfortable level
• Singles spend $45 per week at the modest level

That’s over $3,000 a year just to stay connected.

Why Planning Ahead Is Crucial
With costs rising across the board, having a clear retirement plan is more important than ever. Whether your income comes from superannuation, the Age Pension, investments, or a combination, knowing what’s coming in — and what’s going out — is key.

Consider budgeting methods like:

• Line-item tracking
• Zero-based budgeting
• Percentage-based allocations

Regularly reviewing expenses and adjusting for inflation or unexpected costs (like medical bills) is essential.

Final Thoughts
Retirement in 2025 looks very different from even a few years ago. The rising cost of living — especially in essentials like health, energy, and digital services — means Australians need to plan more carefully than ever to enjoy a secure and dignified retirement.

Whether you're approaching retirement or already there, now is the time to review your financial plan — and make sure it’s keeping pace with the real cost of living.

Working with a licensed financial planner can be worth its weight in gold when it comes to developing a retirement income strategy that maximises income and ensures your money lasts the distance.