THE expenditure of most Australian retirees is modest, regardless of the level of income they have access to.
Research commissioned by the Australian Centre for Financial Studies found that 80 per cent of retired households reported expenditure levels considered to be the most basic standard of living for retirees ($23,797 for singles, $43,226 for couples).
The research also showed that, contrary to conventional wisdom, expenditure did not appear to decline throughout the period of retirement, instead remaining relatively constant.
However, today's retirees are spending more than earlier retirees, and future retiree expenditure could be higher again.
There were also significant regional variations in expenditure levels.
Retirees in Sydney recorded the highest average household expenditure of about $44,000, compared to around $34,000 for those living in Melbourne and $25,000 for those in Tasmania.
Centre chief executive Tom Garcia said the research was timely given the current discussion around the fairness of the superannuation tax concessions, super's objective and what is consideed an "adequate" income in retirement.
"Learning more about what retirees actually spend compared to their income will help us make evidence-based decisions about adequacy and super policy," Mr Garcia said.
"This study suggests that most older households, including wealthy ones, have relatively modest expenditure and - on average - have the highest financial satisfaction.
However, Mr Garcia 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 higher rates of disposable income."
Other key findings of the research, include:
- 15% of all retirees are renters; 8% have mortgages
- Housing costs are significant for the minority of retirees who do not own their homes.
- Overall, this is the wealthiest retired generation ever in Australian history.
- Superannuation has been the fastest growing source of retiree household wealth.
- Wages and super contribute significant income in the early stages of retirement.
- The key expense for retirees over 65 is groceries and meals eaten out.
* The report was conducted by Monash Business School's Australian Centre of Financial Studies based on 12 years of data from the Household, Income and Labour Dynamics (HILDA) survey of about 8000 households.