New research into the spending of Australian retirees has revealed that most retirees have only modest spending rates, regardless of their level of income.
The research, which was commissioned by the Australian Institute of Superannuation Trustees
(AIST) and conducted by Monash Business School’s the Australian Centre for Financial Studies
(ACFS), found that 80% of retired households across Australia were spending at “the most basic standard living for retirees”.
Breaking some of the myths that paint retirees as “grey nomads” spending their retirement income on travel, the research has shown that most Australians are keeping their spending low throughout the length of the retirement period, with little variation over time.
“There are a lot of myths and fear about what retirees need to live on,” said AIST CEO Tom Garcia. “This study suggests that most older households, including wealthy ones, have relatively modest expenditure and – on average – have the highest financial satisfaction.”
Mr Garcia said that while the data showed this trend of modest spending, it also revealed that "we have low income households that appear to be taking on debt or selling down assets to meet their living expenses.”
The research also showed that cost-of-living pressures and where a retiree lived was more of a driving of retirement spending than the wealth of a retiree. Retirees in Sydney were spending more on average ($44,000) than those in Melbourne ($34,000) and far more than those in Tasmania ($25,000).
This new report was based on 12 years of data from the Household, Income and Labour Dynamics (HILDA
) survey of about 8000 households.
- While there is significant income disparity within the HILDA population, the level of household expenditure varies more according to geographic location than it does by level of income. Retirees in NSW spend the most, with retirees in SA and TAS spending the least.
- Housing costs are significant for the minority of retirees who do not own their homes.
- The key expense for retirees over 65 is groceries and meals eaten out.
The report recommended that going forward, more data is required on the leisure activities of the retirees, something that will be explored in the 2016 COTA NSW 50+ Report.