There was an increase in the cost of living for retirees in the June quarter 2018, with increases in the cost of health services, transport, and clothing in particular, according to the Association of Superannuation Funds of Australia (ASFA) Retirement Standard.
The ASFA Retirement Standard June quarter figures show couples aged around 65 living a comfortable retirement need to spend $60,604 per year and singles $42,953, both up around 0.5 per cent on the previous quarter.
At the modest level couples need to spend $39,442 and singles $27,425, up around 0.2 per cent on the previous quarter.
Total budgets for older retirees (those aged 85 and over) increased by around 0.4 per cent at the comfortable level and 0.3 per cent at the modest level.
These increases compare to the 0.4 per cent increase in the overall Consumer Price Index in the June quarter.
“The cost of retirement over the most recent quarter only increased by a relatively small amount and that is welcome news but many retirees will still find it difficult to achieve a comfortable standard of living in retirement,” explained Dr Martin Fahy, ASFA CEO.
“Health care costs are a significant burden for many retiree households. Health care costs in the budgets rose by over 2.2 per cent in the quarter, largely driven by the 4 per cent increase on average in private health insurance premiums.”
According to a recent Grattan Institute report, people over the age of 65 now account for 26 per cent of standard General Practitioner consultations in Australia. The bulk of such consultations leads to the purchase of both prescription and non-prescription medications. Even with some bulk billing of consultation fees, retirees face out of pocket medical expenses on a very regular basis.
Specialist procedures and surgery also can involve substantial out of pocket expenses, with the average gap payment for knee surgery in Australia around $2,000.
Dental expenses are also significant for many retirees with only limited reimbursement from private health insurance. Poorer Australians are less likely to go to the dentist even when they need to do so.
Without sufficient retirement savings retirees face long waiting lists in the public system or have to compromise other aspects of their retirement lifestyle.
Some other significant price increases in the June quarter contributing to the increases in budgets included a 1.7 per cent increase in transport costs driven mostly by a 6.9 per cent increase in fuel costs due to increases in world oil prices flowing through to consumers. Clothing and footwear costs were also up in the quarter largely due to discontinued specials.
A positive development for retirees was a 0.4 per cent fall in food costs with the prices of fruit and vegetables both falling by around 3 per cent. There also was a fall in leisure expenses, driven by a 2.7 per cent fall in domestic holiday travel costs associated with the off peak season for holiday travel.
“A useful thing you can do is get in touch with your superannuation fund to find out what options are available, so that you have the best chance of coping with future increases in health care and other expenses to live your post-work years free from major financial worries,” Dr Fahy concluded.
Table 1: Budgets for various households and living standards for those aged around 65 (June quarter 2018, figures are weekly amounts except for annual total)
| Household type | Single Modest | Couple Modest | Single Comfortable | Couple Comfortable |
|---|---|---|---|---|
| Housing – ongoing only | $97.70 | $109.88 | $114.40 | $119.62 |
| Energy | $37.32 | $50.12 | $47.28 | $58.64 |
| Food | $88.67 | $164.38 | $114.64 | $199.25 |
| Clothing | $20.36 | $38.69 | $27.20 | $50.65 |
| Household goods and services | $33.25 | $39.00 | $73.00 | $89.72 |
| Health | $48.33 | $93.19 | $99.20 | $185.66 |
| Transport | $88.50 | $94.49 | $144.44 | $156.68 |
| Leisure | $91.77 | $143.88 | $178.31 | $267.76 |
| Communications | $19.50 | $21.96 | $24.38 | $31.74 |
| Total per week | $525.38 | $755.60 | $822.85 | $1,161.00 |
| Total per year | $27,425 | $39,442 | $42,953 | $60,604 |
The figures in each case assume that the retiree/s own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement. All calculations are weekly, unless otherwise stated. Annual figure is 52.2 times the weekly figure.
Table 2: Budgets for various households and living standards for those aged around 85 (June quarter 2018, figures are weekly amounts except for annual total)
| Household type | Single Modest | Couple Modest | Single Comfortable | Couple Comfortable |
|---|---|---|---|---|
| Housing – ongoing only | $97.70 | $109.88 | $114.40 | $119.62 |
| Energy | $37.32 | $50.12 | $47.28 | $58.64 |
| Food | $88.67 | $164.38 | $114.64 | $199.25 |
| Clothing | $20.36 | $38.69 | $27.20 | $50.65 |
| Household goods and services | $50.60 | $72.34 | $147.89 | $177.02 |
| Health | $83.06 | $116.49 | $138.19 | $218.59 |
| Transport | $39.45 | $49.31 | $44.38 | $54.24 |
| Leisure | $60.03 | $85.71 | $123.21 | $173.56 |
| Communications | $19.50 | $21.96 | $24.38 | $31.74 |
| Total per week | $496.68 | $708.90 | $781.57 | $1,083.30 |
| Total per year | $25,927 | $37,004 | $40,798 | $56,548 |
The figures in each case assume that the retiree/s own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement. All calculations are weekly, unless otherwise stated. Annual is 52.2 times weekly.
More information
Costs and summary figures can be accessed via the ASFA website. Australians can find out more about superannuation on the independent Super Guru website.
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