Inflation drives the cost of retirement to a record high

Self-funded retirees are the hardest hit by the increasing rise in inflation and cost-of-living according to the latest research from Association of Super Funds Australia.

.

The annual expenditure needed to reach the ASFA comfortable retirement standard rose another 1.1 per cent in the March quarter to hit a record high of $70,482 per year for couples, and $50,004 for singles, taking the annual increase to 7.7 per cent.

“Retiree budgets have been under substantial pressure for over 18 months due to the higher cost of essential goods and services, namely food, fuel and electricity, with the latter up 15 per cent over the past year,” said ASFA CEO, Dr Martin Fahy.

“Self-funded retirees will not be eligible for Federal Budget measures aimed at relieving cost-of-living pressures, and despite recent adjustments to the Age Pension, payments continue to lag inflation.”

During the March quarter, medical and hospital services costs rose 4.2 per cent, the price of pharmaceutical products rose by 4.5 per cent and insurance costs were up a further 3.5 per cent.

The ASFA comfortable standard includes the cost of everyday expenses such as health, communication, clothing and household goods and reflects community expectations as well as changing lifestyle expectations and spending habits.

“Fortunately, we are seeing a turnaround in term deposit income, and critically, the 1 July increase in the Super Guarantee (SG) rate to 11 per cent will put a greater number of Australians on track to achieve the dignified retirements they deserve,” concluded Dr Fahy.

The largest increases in spending categories were medical and hospital services which rose 4.2 per cent in the quarter and 5.3 per cent over 12 months; insurance costs rose 3.5 per cent in the quarter; fruit and vegetables rose 2.4 per cent.

The report found that the price of pharmaceutical products rose by 4.5 per cent and the increase would have been even greater without the reduction in the PBS general patient co-payment applying from 1 January.

Domestic travel and accommodation rose 4.7 per cent in the March quarter and 25 per cent over the year while international travel and accommodation fell by 8.2 per cent in the March quarter as many destinations entered their off-peak season but was up by 38.3 per cent over the year.

The annual increase in gas prices of 26.2 per cent was the highest on record, with an annual increase of 15.5 per cent for electricity.

 

 

 

Keeli Cambourne
29 May 2023
www.smsfadviser.com

More Articles

Why crypto treads an uncertain path through tax minefield

The taxation of digital assets used for lending and borrowing would benefit from clear-sighted...

Read full article

Wheat Production by Country

Check out the countries that produce the most...

Read full article

Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’

Following years of mixed messaging, Labor has bowed to economic pressure and announced changes to its stage...

Read full article

Investment and economic outlook, January 2024

Region-by-region economic outlook and latest forecasts for investment returns. . What might shipping...

Read full article

Quarterly reporting regime means communication now paramount: expert

Communication between SMSF trustees, accountants and advisers is more crucial than ever with the quarterly...

Read full article

Four timeless principles for investing success

Investing success can mean different things to different people. Being clear on what success means for you is...

Read full article

Plan now to take advantage of 5-year carry forward rule: expert

This is the last year that the five-year catch-up contribution rules for concessional contributions can be...

Read full article

Super literacy low for cash-strapped

Financial literacy around superannuation is poor for many lower-income people, who still question why they...

Read full article

Sofie Korac is an Authorised Representative (No. 400164) of Prudentia Financial Planning Pty Ltd, AFSL 544118 and a member of the Association of Financial Advisers.

Financial Advice Sydney and the North Shore Office based in Gordon NSW

Financial Services Guide - Disclaimer & Privacy Policy

^