The cost of a comfortable retirement outstripped the inflation rate in the last quarter, putting pressure on the budgets of retirees.
The ASFA (Association of Superannuation Funds of Australia) Retirement Standard June quarter 2019 figures show that couples aged about 65 living a comfortable retirement need to spend $61,522 per year and singles $43,601.
That is a rise of 0.8 per cent for each on the previous quarter and comes in marginally ahead of the consumer price index (CPI), which recorded a rise of 0.6 per cent.
For those living a more modest retirement, the ASFA standard rose at the same rate as the CPI for couples, and slightly below for singles at 0.5 per cent.
Over the year to June, costs were up about 1.5 per cent for couples at both the comfortable and modest levels, compared with the 1.6 per cent increase in the All Groups CPI.
This equates to couples needing to spend $918 more a year, and for singles $648 more a year.
Budgets for older retirees rose from the previous quarter by about 0.7 per cent at the comfortable level, and by 0.5 per cent at the modest level.
“While the increase in the headline rate of the CPI might not look large, retirees have been facing significant increases in the price of many necessities of life,” explained Dr Martin Fahy, CEO of ASFA.
“The drought has impacted on the prices of a range of food, the cost of private health insurance continues to grow at around twice the general rate of inflation, and petrol prices are up,” Dr Fahy said.
“Many retirees would have welcomed the recent decision to decrease the deeming rate in the asset test for the Age Pension.
“But at the same time they have been facing increased costs of living and lower returns from investments, such as term deposits.
“Having sufficient savings in superannuation to support the lifestyle Australians want and deserve in retirement is an imperative. Moving to 12 per cent for the Superannuation Guarantee is a necessity for those not yet retired.”
The costs for retirees that increased substantially over the past 12 months are:
- Price of bread up by 4.8 per cent
- Price of beef up by 6 per cent and lamb up by 13.5
- Price of milk up by 2.9 per cent
- Price of fruit up by 4.9 per cent
- Price of vegetables up by 6.2 per cent
- Price of beer up by 2.5 per cent
- Property rates up by 2.3 per cent
- Price of hairdressing up by 2.9 per cent
- Price of private health insurance up by 3.25 per cent on average
- Price of dental services up by 2.3 per cent
- Price of domestic travel up by 3.5 per cent and price of international travel by 4.1 per cent.
The most significant price increases in the June quarter were automotive fuel (10.2 per cent), medical and hospital service (2.6 per cent) and international holiday, travel and accommodation (2.7 per cent).