How will your savings stack up in retirement?

Time to put money away for retirement

Retirement is often something people put to the back of their minds until it's too late, but with the cost of living rising, inaction is no longer an option.

June quarter figures from the Association of Superannuation Funds of Australia (ASFA) show medical services in particular are becoming increasingly expensive, as they rose 4.6 per cent compared to the previous three-month period. 

This was mainly the result of increases in private health fund premiums that came into force on April 1.

If international holidaymaking is on the agenda once you've finished work, bear in mind the cost of travel and accommodation is 3.6 per cent higher than it was three months ago.

The amount couples need to live a comfortable retirement increased 0.5 per cent during the final quarter of the 2013-14 financial year, meaning they would need $510,000 in their pension pots to avoid money problems.

Single retirees also face a 0.5 per cent rise in the cost of living if they want to lead a modest lifestyle, which equates to around $23,363 per year.

Pauline Vamos, chief executive officer of ASFA, said people need to take action now to keep financial problems at bay when they eventually do finish work.

She continued: "Big jumps in the cost of items such as health care and medicines can hit retirees hard, particularly if they don't have much money to spare.

"This is where saving more superannuation can give you peace of mind, knowing that you will be able to cope financially as costs increase."

Starting young is the best option, as Ms Vamos explained how this group will be able to make the most of compound interest. For every $1 that's put into retirement savings now, it could gain as much as $7 by the time retirement age is reached.

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