Retirees are grappling with rising costs for essential goods and services, seeing the cost of funding a comfortable retirement increase by 3.7% over the last 12 months, according to data released by the Association of Superannuation Funds of Australia (ASFA).
The June quarter saw notable increases in home and vehicle insurance costs, as well as private health insurance prices. These pressures have resulted in further financial strain on retirees, with budgets rising by 0.9% for both singles and couples during the quarter. As a result, couples around the age of 65 now need A$73,337 ($49,650) per year to enjoy a comfortable retirement, while singles require A$52,085.
Since 2004, the ASFA Retirement Standard has set the industry benchmark, capturing the costs of essentials like health, communication, clothing and household goods. It not only reflects community expectations but also drives the evolving standards and spending habits of retirees.
ASFA CEO Mary Delahunty, highlighted the financial challenges that retirees are currently facing. “Retirees are managing an increasingly difficult landscape where the costs of essential goods and services keep rising. Health, home, and transport are vital to their well-being, yet the expenses tied to these necessities are steadily increasing,” she said.
Ms Delahunty also emphasised the importance of both compulsory superannuation and voluntary contributions, which provide retirees with the financial security they need to enjoy their later years. “For Australians to have the retirement they deserve, it’s crucial that they have access to adequate superannuation savings,” she concluded.
The latest ASFA Retirement Standard continues underscore the ongoing challenges that retirees face in managing their finances amid persistent cost pressures. As living expenses steadily rise, the need for considered financial planning and adequate superannuation savings has never been more critical.
Among spending categories showing the largest quarterly and annual price changes are:
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Insurance: Insurance premiums saw a sharp increase, rising by 3.1% in the June quarter and 14.0% over the past year. This surge is largely due to higher reinsurance costs, the impact of natural disasters, and increased claims.
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Private Health Insurance: Private health insurance premiums increased by an average of 3.03% from 1 April, marking the largest rise since the pandemic began. This has added to the financial burden on retirees, particularly those on fixed incomes.