Age pensions falls short of retiree needs

The age pension is still not enough to cover the expenses of retirees at age 90 despite the fact their expenses are significantly less than those of 70-year-olds, according to the Association of Superannuation Funds of Australia (ASFA).

In a new report on the spending patterns of older retirees, the ASFA found that a 90-year-old couple leading a modest lifestyle will need $31,000, while the age pension provides couples with just $28,584 annually — a shortfall of more than $2,400.

The age pension for singles provides $18,962 including supplements, which still fails to keep up with the needs of a 90-year-old leading a modest lifestyle. According to the ASFA, those retirees need around $20,630 — a difference of more than $1,600.

The ASFA said another implication to be drawn from its figures was that in planning for the future, retirees should not necessarily assume it is necessary to maintain a constant level of expenditure over retirement.

In comparing the needs of 90-year-old retirees to those aged 70, the ASFA found significant differences in the expenses of retirees leading a comfortable lifestyle.

For couples aged 70, total spend for a comfortable lifestyle was $54,562, while those aged 90 spend $48,900 — an 11.6 per cent difference.

Singles leading a comfortable lifestyle in their 70s would need $39,852, while those in their 90s would need $36,770 — a difference of 8.4 per cent.

The differences were less noticeable for those living a modest lifestyle, with little difference between a 70 and 90-year-old couple, and only 4.6 per cent difference between a 70 and 90-year-old single.

The cost of transport and leisure were pointed to as the major contrasts between the two age groups, as relatively few retirees aged 90 drive motor vehicles or go on overseas holidays.

However, this is balanced out by the fact that those aged 90 have additional expenses in household services and healthcare.