Drought drives spike in retiree spending

Retirees living expenses

The cost of living for retirees accelerated during the December quarter, the latest ASFA Retirement Standard has revealed.

Retirees can continue to expect a rise in their living expenses, according to the Association of Superannuation Funds of Australia (ASFA).

ASFA’s Retirement Standard for the December quarter 2019 revealed retirees experienced a 0.8 per cent rise in their living costs compared to the previous quarter, with couples aged around 65 needing to spend $62,269 a year and singles needing to spend $44,146 a year.

ASFA chief executive Martin Fahy said: “Cost increases for retirees have exceeded those for the general population and we’ve also seen an acceleration in the rate of increase in retirement expenses.

“The drought has impacted on prices paid by retirees for food and there also have been other significant price increases.

“While the recent rains are very welcome, meat prices are likely to increase even further as farmers hold back their breeding stock from the market.”

The superannuation industry peak body said the impact of the drought could be seen even more clearly in the increase in the price of food between the September and December quarters.

“Over the three-month period there was a 6.8 per cent rise in fruit prices and a 2.9 per cent rise for beef and veal,” it said.

In addition, ASFA pointed out the costs of home ownership had also increased in the December quarter, with home maintenance costs rising by 2.7 per cent, water and sewerage charges increasing by 2.9 per cent and property rates up by 2.5 per cent.

“Rents were up by only 0.2 per cent on average over the year, but renters have much higher housing costs in retirement than homeowners,” it added.

“The costs of automotive fuel were also up by 2.9 per cent over the year.”

Earlier this month, ASFA called for an alternative view of the retirement sector, stating the issue of retirement income adequacy should be considered in light of the “lived experience” of retirees.

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