- 19 January, 2015
Realise your Dream
The Realise Your Dream blogs are written by Peter Kelly and Mark Teale. More information about the authors can be found here
In Tealey’s recent blog, he mentioned a number of unfamiliar terms used to describe different types of fears.
Not to be outdone, I have also found a new word….….nonagenarian.
But this has nothing to do with fear, at least not for most people.
A nonagenarian is a person aged in their 90s. That is, the decade before one becomes a centenarian.
In previous posts, we have spoken about retirement living costs. In those posts, we refer to the costs of a modest and a comfortable retirement lifestyle. The Association of Superannuation Funds of Australia (ASFA) conducts regular research to provide updated figures on these living costs.
The ASFA research has traditionally looked at the living costs of retired Australians aged in their 70s.
But does it cost an older Australian more or less, to live in retirement?
It is a commonly held belief that as we age, our living costs will reduce. But if so, by how much?
I have often held the view that people spend more in the early years of retirement particularly as they embrace a range of leisure activities including travel and entertainment, but as they age, living costs will taper off, only to start rising again in the later years of life when more money is needed for health and everyday living costs (including cleaning, provision of meals, assistance with personal care etc.). In other words, discretionary spending is replaced by increased spending on the costs of health and everyday living.
ASFA has just released new research that takes an in-depth look at the living costs of Australians in their late 80s and 90s. Importantly, this is an increasing demographic with over a quarter of males, and 40% of women, currently aged 65, expected to live to age 90. Also interestingly, more than 50% of retirees in their late 80s and early 90s continue to live in their own freestanding or strata-titled home.
So what does the research tell us about the living costs for nonagenarians?
The living costs for a comfortable lifestyle reduce marginally (by 8.9% for a couple, and 11.1% for a single person), while the reduction living costs for a modest lifestyle are far less pronounced (0.1% for a couple, and 3.5% for a single person).
The following table highlights the annual living costs for 70 year old retirees, and those aged 90:
|Modest lifestyle – single||Modest lifestyle – couple||Comfortable lifestyle – single||Comfortable lifestyle – couple|
|At age 70||$23,489||$33,784||$42,587||$58,326|
|At age 90||$22,670||$33,744||$37,875||$53,123|
These living costs are based on the assumption that retirees continue to live in their own home and does not take into account the costs associated with living in residential age care.