Life Begins At.....
Issue link: http://ebook.aprs.com.au/i/47118
Spending patterns in retirement – where does all the money go? by John Paul In my last article, I touched on the subject of retirement income needs, and the fact that it's hard to know what your spending patterns will be until you actually retire. I want to now look more deeply into the subject of spending patterns in retirement, because knowing what to expect can be a great help in answering the perennial question of 'How much super is enough?' I'll look at what a typical retired couple might spend their money on now, and how that has changed from a few years ago. I'll also comment on how spending patterns change as you get older. Later on, I'll examine an investment strategy that may help to make your retirement savings last longer. But first, let's look at the cost of a comfortable lifestyle in retirement. The cost of a comfortable lifestyle The best publicly-available guide to retirement costs is the series of Retirement Standard surveys published by ASFA, the Association of Superannuation Funds of Australia. These surveys are based on the spending patterns of a representative sample of retired people, and they put a cost on different lifestyle standards which ASFA label as 'modest' and 'comfortable'. For the purposes of this article, I'll keep it simple by referring to the comfortable lifestyle for a retired couple. 52 THE RETIREE SUMMER ASFA Retirement Standard – Comfortable Lifestyle, Couple – June Quarter 2011 Expenditure category Housing – ongoing (home and contents insurance, rates, home improvements, repairs and maintenance) Energy (electricity and gas) Food (groceries and other fresh food) Communications (home and mobile phones, broadband internet) Household goods and services (cleaning and other supplies, cosmetics and personal care, hairdressing, music and CDs, newspapers and magazines, computer, printer and software, household appliances, pest control, alarm service) Clothing and footwear Transport (vehicle, running costs, public transport) Health (health insurance, chemist, co-payments and out of pocket expenses) Leisure (club membership, TV, DVD, digital camera, alcohol at home, eating out, cinema, theatre, sport, domestic and overseas holidays) TOTAL Source: ASFA website 1,053.91 299.73 32.21 85.67 43.64 195.24 Weekly cost ($) 76.46 58.18 139.86 122.92