Its influence is growing. The government cites it. AustralianSuper uses it in its Super To Income Converter web calculator. Financial advisors find it a more tangible way of explaining retirement goals than replacement rates of income. It is used in the metrics of the QSuper cohort funds, so that whenever it shifts in value the investments change too. Journalists like to use it as a way of scaring the public about how much they are behind in their savings.
Despite all this, the praises of the ASFA Retirement Standard, a measure of how much we are likely to spend in retirement for a comfortable and a modest lifestyle is everywhere, is relatively unsung. When embarrassment over the state of the decumulation phase of superannuation is near universal, the usefulness of the standard, which is ten years old this year, can be overlooked; neither the UK or US system has consensus on any such guage.
Part of the reason the standard does not shout its worth is the lack of an obvious profit motive and the dedicated, but unassuming style of its manager, Ross Clare, director of research at ASFA. It was sponsored by Westpac, but then it was decided to position it as a free service for ASFA members and the public alike. Clare says not only will it continue to be free, but there are no plans to expand it. The comfortable and modest measures of expenditure in retirement, which currently sit at $58,128 and $33,664 for a couple, will remain the only two benchmarks available.
Clare is happiest discussing its inner workings. The public’s perception of what they will spend in retirement is only $5000 short of what the standard states. Those who end up privately renting in retirement will need a higher figure, as will those, who Clare wryly notes, occasionally phone up to state that the figure is too low for those running a pool filter or who use air conditioning a lot of the time. The standard amazingly takes in the price of goat meat in its calculations.
There are some in the industry who state that the standard should be broadcast more widely.
ABC TV morning news offers a daily update of the ASX, the S&P500 and the gold price, as a somewhat abstract notion of economic health for its viewers, but the program hardly ever mentions how much people will need to save to retire, a much more tangible and confronting figure. Clare agrees this would be more useful, but points out his figures are only made quarterly, though he says communication of the standard will improve. The goal for the industry should be changing the situation where it is a rarity for retirees to reach the ASFA standard comfortable expenditure level, to one where it is more commonplace.
