Retirees’ spending has fallen faster than expected into old age, according to findings from the analysis of real-world expenditure data conducted by Milliman.
The median retired couples’ expenditure fell by more than one-third (36.7 per cent) as they moved from their peak spending years in early retirement, between 65 to 69 years of age and into older age (85 years and beyond).
At the same time, the decline in expenditure for couples in the early years of retirement was about six to eight per cent across each four-year age band and then it accelerated once retirees passed 80 years of age.
According to the Association of Superannuation Funds in Australia (ASFA), a “comfortable” couple aged 85+ years would spend about 7.8 per cent less than those aged 65-85 years of age, with food expenditure being the largest component of essential spending, while all discretionary expenditure such as travel and leisure would continue to decline even more.
The Milliman Retirement Expectations and Spending Profiles (ESP) analysis showed the top 75th percentile of retirees aged 85-plus were still spending at or below the Aged Pension.
Milliman stressed that financial plans and products should reflect these expenditure changes and the greater risks, such as market falls, and uncertainties, such as health events.
At the same time, many products which were aimed at retirees still assumed their spending would rise in line with CPI, with more than half of all of balanced pension funds ranking their performance against CPI.
BlackRock boss Larry Fink praised Australia’s superannuation system in his annual chairman’s letter.
The prudential regulator has announced it will publish new expenditure data of superannuation funds, providing details on expenses like advice, director remuneration, and payments to unions.
Affirming the UK’s growing attractiveness as an investment destination, a number of Australia’s largest investors recently joined the UK Foreign Secretary for an exclusive briefing in Canberra to discuss further opportunities for trade and growth.
The specialist superannuation law advisory practice is set to wind up, with managing partner Jonathan Steffanoni planning to bring a new offering to market.
Add new comment