The changing landscape for Australia’s older retirees
The life expectancy of Australians born today is the fifth highest in the world. It means that many Australians can expect to live at least 15 years beyond the normal retirement age. And with our life expectancy gradually increasing, there are significant ramifications for our retirement planning.
The 65-plus population has more than doubled in the last 20 years from 1.58 million in 1984 to 3.5 million in 2014. And the number of Australians aged 85-plus is expected to quadruple from around 400,000 in 2010 to 1.8 million by 2050.
Further up the scale, in 1952 – the year that Queen Elizabeth II became sovereign – 40 letters of congratulations were written for Australians turning 100. This year, 2,643 Australians will turn 100 and in 30 years the number of congratulatory letters written to Australians turning 100 will increase to 18,567.
The crucial financial question for our growing and ageing population of retirees based on these trends should be how much money you will need for retirement. As you plan your income needs, you should take into account findings in a recently published spending patterns of older retirees report from the Association of Superannuation Funds of Australia (ASFA), which has also introduced a new ASFA Retirement Standard for people aged 90 or more.
It says that people over 90 and still living in their own homes generally spend less than those aged about 70, to the tune of about $5,000 less per year for what ASFA defines as a comfortable retirement. The figure is broadly true for both singles and couples.
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While older retirees spend less on holidays and outdoor activities, costs associated with assistance around the home, like maintenance, cleaning and meals, increased. Unsurprisingly, medical and pharmacy costs also increase for many people as they get older.
ASFA’s Chief Executive, Pauline Vamos, said that the government age pension would not provide Australians with a comfortable retirement and, with 50 per cent of retirees in their late 80s and early 90s still occupying their own homes, the government should provide greater subsidies for household assistance.
“As average life expectancies continue to increase, most older Australians will require both superannuation savings and financial support from government to accommodate their long-term retirement spending needs,” said Ms Vamos.
It’s important to keep in mind these factors affecting your retirement funding when looking at your future years ahead.
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