The cost of living continues to rise for Australia’s retirees, making it all the more imperative for financial advisers to help people save for their future early.
New figures from the ASFA show in the September quarter, the expenditure required for couples wanting to live a ‘comfortable’ retirement rose by 1.4% to $57,195 per year.
It would require a joint superannuation balance of around $510,000 to achieve this.
Couples seeking a ‘modest’ retirement lifestyle will need to spend $33,120 a year, up 1.5% from the previous quarter.
But it was single retirees who faced the greatest increase in costs, with expenditure for a ‘modest’ retirement recording a 1.7% increase on the previous quarter to $23,032 per year.
This was largely attributed to a jump in housing-related costs, electricity and transport, which often forms a large part of budgets for retirees in this category, says ASFA.
Singles seeking a ‘comfortable’ retirement will now need to spend $41,830 a year, an increase of 1.5% on the previous quarter, and require a super balance of around $430,000.
While a modest retirement lifestyle means people are only able to afford fairly basic activities, a comfortable retirement lifestyle lets an older, healthy retiree be involved in a broad range of leisure activities, have a good standard of living and take occasional domestic and international holidays.
It is important policy makers take into account the different spending patterns of retirees when looking at the impact of inflation on the cost of living for this group, says ASFA chief executive Pauline Vamos.
“This quarter's substantial increase in the cost of items such as electricity, petrol, council and water rates has the potential to hit retirees hard, as they often have less flexibility in their budgets to accommodate additional expenditure in areas where there is less discretionary choice.”
The price of electricity rose from the previous quarter by 4.4%. Housing-related items such as property rates and charges rose by 8% due to the annual council rate review, and water and sewerage by 10%.
There was also a relatively large increase in the cost of transport, mainly due to a 7.6% increase in the price of petrol compared to the previous quarter.
Retirees looking to get away may be hit in the pocket, as the cost of international travel and accommodation rose 6% this quarter. This is likely due to increased airfare prices to most destinations coinciding with the shoulder and peak season in Asia, Europe and America, says ASFA.
However, Vamos noted health services and food prices remained relatively stable this quarter, which helps retirees as this often takes up a good chunk of their budget.