Overall inflation low but retirees facing steep increases for basics

Living cost changes are more or less in line with the All groups CPI 0.6 per cent increase between the March and June quarters 2019.

 

The ASFA Retirement Standard June quarter 2019 figures indicate that couples aged around 65 living a comfortable retirement need to spend $61,522 per year and singles $43,601, up 0.8 per cent for each on the previous quarter. At the modest level there was an 0.6 per cent increase for singles and a 0.5 per cent increase for couples.

 

Over the year to the June quarter 2019 costs were up around 1.5 per cent for couples at both the comfortable and modest levels, compared to 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 the amount is $648.

 

Budgets for older retirees rose from the previous quarter by around 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” said Dr Martin Fahy, chief executive officer, Association of Superannuation Funds of Australia.

 

“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.

 

“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 last 12 months are:

  • Price of bread up by 4.8 per cent
  • Price of beef up by 6.0 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).

 

Table 1: Budgets for various households and living standards for those aged around 65 (June quarter 2019, national)

Household type

Single Modest

Couple Modest

Single Comfortable

Couple Comfortable

Housing – ongoing only

$99.58

$111.92

$116.66

$121.94

Energy

$36.95

$49.62

$46.81

$58.05

Food

$90.75

$168.25

$117.34

$203.94

Clothing

$20.40

$38.78

$27.25

$50.75

Household goods and services

$33.31

$39.15

$73.23

$90.20

Health

$49.71

$95.91

$102.00

$190.94

Transport

$90.01

$96.12

$146.92

$159.36

Leisure

$93.48

$146.57

$181.75

$273.06

Communications

$18.64

$21.00

$23.31

$30.34

Total per week

$532.84

$767.32

$835.26

$1,178.59

Total per year

$27,814

$40,054

$43,601

$61,522

 

Table 2: Budgets for various households and living standards for those aged around 85 (June quarter 2019, national)

Household type

Single Modest

Couple Modest

Single Comfortable

Couple Comfortable

Housing – ongoing only

$99.58

$111.92

$116.66

$121.94

Energy

$36.95

$49.62

$46.81

$58.05

Food

$90.75

$168.25

$117.34

$203.94

Clothing

$20.40

$38.78

$27.25

$50.75

Household goods and services

$51.13

$73.28

$149.73

$179.41

Health

$85.63

$120.00

$142.31

$224.99

Transport

$40.10

$50.12

$45.11

$55.13

Leisure

$61.00

$87.25

$125.37

$176.54

Communications

$18.64

$21.00

$23.31

$30.34

Total per week

$504.17

$720.22

$793.88

$1,101.09

Total per year

$26,318

$37,595

$41,441

$57,477

The figures in each case assume that the retiree/s own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement. All calculations are weekly, unless otherwise stated. Annual figure is 52.2 times the weekly figure.

 

More information

Costs and summary figures can be accessed via the ASFA website. Australians can find out more about superannuation on the independent Super Guru website.

 

9 August 2019.