Cost of Living Adds Pressure to Retirement
Whilst the cost of living for those in retirement has only increased slightly over the past quarter, the continued increase in the costs of food, electricity, health and water are still putting pressure on many Australian retirees to achieve a comfortable standard of living in retirement.
This was one of the key findings coming out of ASFA’s Retirement Standard June quarter figures, which has seen the Association revise up the amounts needed for retirees wanting a modest and comfortable lifestyle in retirement.
For couples aged around 65 who want to live a comfortable retirement, they will now need to spend $60,063 per year, with singles needing $43,695 – an increase of 0.2 per cent on the previous quarter.
At the modest level, singles now need to spend $24,270 and couples will need $34,911 – up 0.1 per cent on the previous quarter.
Total budgets for older retirees (those aged 85 and over) increased by around 0.5 per cent, compared to the previous quarter at both the comfortable and modest levels.
The annual increase in living costs at the modest level was in each case higher than at the comfortable level, reflecting the greater relative importance of electricity, health care, council and water rates in the modest budgets.
The annual increase was 1.5 per cent for comfortable and 2.1 per cent for modest. These compare to 1.9 per cent for the general Consumer Price Index.
The most significant price increases in the June quarter contributing to increases in annual budgets for retirees were for medical and hospital services (4.1 per cent), reflecting the annual increases in private health insurance premiums on 1 April.
Commenting on the findings, ASFA chief executive officer, Dr Martin Fahy said: “The cost of retirement over the most recent quarter only increased by a relatively small amount and that is welcome news, but many retirees are still finding it difficult to achieve a comfortable standard of living in retirement.
“In particular, retirees with health care needs are facing significant increases in costs.”
Fahy said the pension was not enough to sustain a comfortable retirement and called for greater financial literacy in the community.
“We need people to be retirement ready by saving for the sort of life they want to live. The magic of compound interest and tax savings in super can help lift living experiences in later life,” Fahy said. “Retirees now and in the future need their super to increase and be safeguarded. People need to be super skilled to be free from major financial worries.”
Steve Jenkosky trading as Golden Age Advisory is an Authorised Representative of Synchron AFS License No. 243313.
Unless specifically indicated, the information contained in this BLOG post is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a financial adviser.