Cost of 'comfortable' retirement hits record levels

The Association of Superannuation Funds of Australia (ASFA) lifted their “comfortable retirement standard” by 1.1 per cent in the March quarter to a record of $70,482 per year for couples, and $50,004 for singles.

That rise takes the annual increase to 7.7 per cent.

“Retiree budgets have been under substantial pressure for over 18 months due to the higher cost of essential goods and services, namely food, fuel and electricity, with the latter up 15 per cent over the past year,” ASFA CEO Dr Martin Fahy said.

“Self-funded retirees will not be eligible for Federal Budget measures aimed at relieving cost-of-living pressures, and despite recent adjustments to the Age Pension, payments continue to lag inflation.”

During the March quarter, ASFA found that medical and hospital services costs rose 4.2 per cent, the price of pharmaceutical products rose by 4.5 per cent and insurance costs were up a further 3.5 per cent.

The ASFA “comfortable standard” includes the cost of everyday expenses such as health, communication, clothing and household goods and reflects community expectations as well as changing lifestyle expectations and spending habits.

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“Fortunately, we are seeing a turnaround in term deposit income, and critically, the July 1 increase in the super guarantee (SG) rate to 11 per cent will put a greater number of Australians on track to achieve the dignified retirements they deserve,” Fahy said.

Other jumps were seen in fruits and vegetables (up 2.4 per cent in the quarter), and domestic travel and accommodation (4.7 per cent in the quarter and 25 per cent in the past year).

International travel and accommodation actually fell 8.2 per cent in the March quarter, but still rose 38.3 per cent over the past year.

The annual increase of 26.2 per cent for gas prices was the highest on record, while electricity costs rose 15.5 per cent across the year.