The annual cost of a ‘comfortable’ retirement for 65-year-old retirees has risen to $60,977 for couples and $43,317 for singles, according to the latest figures.
Australia’s peak superannuation body, the Association of Superannuation Funds of Australia (ASFA), revealed the new costs of living for retirees in its ASFA Retirement Standard December quarterfigures.
Compared to the September 2018 quarter, the latest costs reflect a rise of 0.2% for couples and 0.3% for individuals.
These rises compare favourably with the rate of consumer price inflation (CPI) over the same period, according to ASFA CEO Dr Martin Fahy.
“The fact that the cost of retirement over the most recent quarter only increased by a relatively small amount is welcome news for retirees as prices have been increasing for a number of essentials,” Dr Fahy said.
“The costs for what could be called ‘traditional expenses’ for retirees have risen at a rate higher than the overall rise in the CPI.”
According to the ABS (Australian Bureau of Statistics), the quarterly change in CPI between September to December 2018 was 0.5%.
Over the same period, the ABS’s Selected Living Cost Indexes, which are more specific than CPI, rose 0.4% for age pensioners and 0.5% for self-funded retirees.
The main reason for the difference between ASFA and the ABS’s figures is the fact that tobacco isn’t included in ASFA’s retirement budget calculations.
The cost of a modest retirement for 65-year-olds rose 0.2% to $39,775 for couples and 0.3% to $27,648 for singles.
A ‘modest’ retirement is defined by ASFA as better than the Age Pension but only able to afford basic activities, while a ‘comfortable’ retiree is able to afford things such as private health insurance, good clothes and occasional international holidays.
Experts say the increasing cost of food, fuel and medical expenses means Aussies will need more savings to live comfortably in retirement. pic.twitter.com/a4eM13IrEd— Sunrise (@sunriseon7) February 24, 2019
Travel & fruit costs rise steeply, tech & wine costs slide
With varied cost changes across different cost categories, Dr Fahy said movements in the cost of living depended on the lifestyle of the individual retiree.
“Australia’s grey nomads experienced significant price increases due to increased costs for domestic holiday travel and accommodation, and a 6.7 per cent increase in fuel costs,” he said.
“Supply shortages caused by the ongoing drought also led to significant cost increases for fruits, meat and seafood, with lamb in particular
“On the other hand, retirees living what could be described as a more urban lifestyle experienced only modest expense increases, with the cost of wine down 0.4 per cent over the year.
“In good news for technophile retirees, computing and AV equipment prices have also dropped slightly by 1.5%, while telecommunication costs have fallen by 4.7 per cent.”
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