New research on Australian retirees shows that they have only modest levels of spending, regardless of income.
The research, based on 12 years of data from the Household, Income and Labour Dynamics (HILDA) survey of about 8000 households, found 80 per cent of retired households reported spending only $23,797 for singles and $43,226 for couples, per year.
The study was commissioned by the Australian Institute of Superannuation Trustees (AIST)and conducted by Monash Business School’s Australian Centre of Financial Studies (ACFS).
How much retirees spend largely depends on where they live, with those in Sydney recording the highest average household expenditure of around $44,000 per year, compared to around $34,000 for retirees living in Melbourne and $25,000 in Tasmania.
AIST CEO Tom Garcia said the research was timely, given the current discussion around the fairness of the super tax concessions, super’s objective and what is considered to be an ‘adequate’ income in retirement.
“There are a lot of myths about what retirees need to live on. This study suggests that most older households, including wealthy ones, have relatively modest expenditure and – on average – have the highest financial satisfaction.”
But he said low income retired households appeared to be struggling.
“On the one hand we have low income households that appear to be taking on debt or selling down assets to meet their living expenses, while at the other end of the spectrum, the very wealthy households appear to have high rates of disposable income.
“The report also exposes the need for greater data around retirees’ expenditure on aged-care and leisure to provide a complete picture of retirees’ behaviours.”
The study also found this is the wealthiest retired generation ever in Australian history, with household wealth and income continuing to increase with each successive HILDA survey. Today’s retirees are also spending more than earlier cohorts at a similar age.
You can access the full research here.