Significant increases in the cost of health care, food, electricity and rates over the past 10 years is driving the cost of retirement higher at a faster rate than CPI.
The Association of Superannuation Funds of Australia (ASFA) Retirement Standard modest budget has increased by 36% for a couple, and 33% for a single person, between June 2006 and March 2017. The ASFA Retirement Standard comfortable budget has increased by 26% for a couple and 23% for a single person over the same period.
This compares to a 28.6% increase in the Consumer Price Index (CPI) over the same period.
“The categories of expenditure that really impacted the budgets are not altogether surprising,” said ASFA CEO Dr Martin Fahy.
“Over the period, electricity costs increased by 124 per cent, health costs by 60 per cent, property rates and charges by 83 per cent and food costs by 24 per cent,” he said.
“Price changes for less essential items tended to be lower and in some cases prices fell.”
“The price of clothing fell by a total of three per cent over the period with an eight per cent fall in the cost of communications (including telephone and mobile phone charges).”
“The cost of international holidays rose by a relatively modest 16 per cent over the period.”
Dr Fahy said both the modest and comfortable ASFA Retirement Standard budgets assumed that retirees owned their own home outright and were relatively healthy.
“Of increasing concern is the reality of many more retirees at the mercy of the private rental market, so when you consider the increase in renting costs, it highlights the need for increasing numbers of retirees to have much greater super balances to support a reasonable retirement,” he said.