While the headline inflation rate is low, retirees are seeing “steep” increases in the costs of basic items.
The Association of Superannuation Funds of Australia (ASFA), with the release of its latest Retirement Standard, has found that over the year to June 2019 costs for retirees increased by around 1.5%, compared to 1.6% for CPI. This equates to couples needing to spend an additional $918 to maintain their standard of living, and $648 for singles.
However this headline figure conceals some substantial increases over the last 12 months, particularly in food – with bread up 4.8%, beef up 6.0%, lamb 13.5%, vegetables 6.2%, fruit 4.9%, and milk up 2.9%.
“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 ASFA CEO Dr Martin Fahy.
“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 ASFA Retirement Standard for the June quarter 2019 has a couple aged around 65 having to spend $61,522 a year for a ‘comfortable’ standard of living. Singles have to spend $43,601. For the ‘modest’ standard the figure for couples is $40,054, or $27,814 for singles.