New spending figures published by the Association of Superannuation Fund of Australia (ASFA) define what it means to be comfortable in retirement. And while their numbers are well above the current age pension payments, I am not sure even those elevated numbers realistically measure up to what many, if not most, people would describe as comfortable. 

The superannuation body defines a comfortable retirement as one that includes premium health insurance, regular leisure activities, occasional meals out, an annual domestic holiday, and an international trip every seven years. 

According to ASFA, a couple aged 65 must spend $1382 per week or $72,148 per year to be comfortable. The numbers are 3.5 per cent higher than a year ago thanks to inflation, but the amounts haven’t risen as much as inflation because items such as school fees, university fees and tobacco were deemed irrelevant to the retirement standard. 

Figure 1. The ASFA comfort standard 

ASFA also reported that to reach the ‘comfortable’ level of spending, a couple required a combined super balance of $690,000, and a single person required $595,000 combined with the aged pension.

Table 1. A comfortable retiree’s weekly budget

Table 2., represents the same expenses on a monthly basis.

Table 2. A comfortable retiree’s monthly budget

The first observation you might make is that a comfortable couple aren’t going to any extravagant restaurants on their food budget. Not in Sydney, anyway.

I randomly selected an upmarket new Sydney CBD restaurant and looked up the menu to see how far that $610.51 monthly food budget would go on a romantic, albeit extravagant, night out in the city.

Figure 3. A comfortable dinner?

Order a little bread for two, a starter each, share a vegetarian and beef main course with garlic butter and two sides and you’ve enjoyed a glamorous meal for $150. But you haven’t had anything to drink. At these establishments, you can add $9 per bottle of water, $25 for a glass of champagne, $30 for a cocktail, and hundreds for a bottle of wine marked up threefold or even fourfold above retail prices for the same bottle. Try buying wine by the glass; that first glass will pay the restaurant for the entire bottle cost. We’ll say $30 for a glass of wine to accompany the scotch fillet and vegetables. You’ve spent $273, or 45 per cent of your monthly food budget. You’re not doing that! And if you do go out monthly for a date night, you will need to count your pennies at Coles and Woolies for the rest of each month.

According to Yahoo Finance, a grocery shop at those two supermarkets could feed a family of four for a “couple of days” for $56. Presumably, the same shop could feed a couple for four days, there are 30.14 days in the average month and taking one day off for the monthly date night, you’ll need $407 (way over ASFA’s budget) to pay for food for the rest of the month. According to Canstar, the average weekly grocery bill for a two-person household is $155. Again, it’s much higher than the budget provided and while I know people who can live on less, the proposed budget is supposed to provide for a ‘comfortable’ retirement.

And what about communications? I looked up affordable mobile phone plans and discovered Dodo offers 50GB monthly data and unlimited national calls and text plans for $25/month, so there’s $25 if you’re single or $50 for a couple immediately taken from that $98.00/$128.00 budget gone. If you are single, you have just enough for a $69 per month Foxtel subscription, but you don’t have anything left to pay for the internet to be connected! The cheapest I found is supplied by iinet for $59.99 per month. With the budget suggested, even a couple can’t afford two mobile phone subscriptions, a basic home internet plan, and Foxtel.

Now, at this point, someone will respond by pointing out they could bundle their phone, internet and Foxtel and perhaps make it fit into the budget if they take the first-month free deal, etc. You can subscribe to Foxtel for $25/month provided you are on one of Telstra’s post-paid subscriptions for phone and internet, but these are relatively more expensive to begin with, and the ASFA-proposed $98 per month communications budget for a single retiree is simply not going to give you internet, mobile and entertainment.

It is also possible to take advantage of retiree discounts, but I am not sure these will go far enough to make much difference to the level of ‘comfort’. And watch out if you have kids or grandkids living overseas. You will have to refrain from calling them and wait until they call you.

It seems to me that both the food and communications budgets are relatively ‘uncomfortable’. While we could perform the same examination of all the other categories, we don’t need to. Retirees can’t afford to eat comfortably nor stay connected with family and friends with the budget provided.

So, what’s this all about? It seems official definitions of a comfortable retirement aren’t comfortable at all. Given the real cost of living comfortably, retirees must consider how to maximise their income.

As you might have already guessed this article isn’t written completely altruistically. The Aura Private Credit Income Fund (for wholesale investors only) has been running since August 2017 and has generated a 9.62 per cent compounded annual return (distributions reinvested), no loss of capital and no negative months to 29 January 2024. If you are aiming for a truly comfortable retirement, you need to aim higher when it comes to generating income. That’s been the Aura Private Credit Income Fund’s aim too, and it has achieved it for more than 6 ½ years.

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