The cost of living expenses and spending for retirees rose in recent months despite the financial impact of the COVID-19 pandemic diminishing during the same period, the latest Association of Superannuation Funds of Australia (ASFA) Retirement Standard has revealed.
ASFA’s Retirement Standard for the September quarter found retirees had experienced an increase in their living costs compared to the June quarter, with the cost of living a comfortable retirement for couples aged around 65 rising by 0.3 per cent to $62,083.
The cost of living a comfortable retirement for singles aged around 65 rose by 0.5 per cent over the quarter to $43,901.
In addition, the effect of the pandemic on retirement budgets for couples and singles was less pronounced than during the previous quarter, but retiree lifestyles had yet to return to normal due to continued restrictions on travel and changes to entertainment and dining-out options.
The report revealed retirees were spending more of their income on household repairs and renovations, as well as appliances and other household items, as a result of spending more time at home.
“COVID-19 has had a substantial impact on Australia’s financial and economic conditions, but there has been a partial unwinding of both price increases and decreases that immediately flowed from the impact of the pandemic,” ASFA chief executive Martin Fahy said.
“Dramatic changes in our lifestyles had a big impact on demand and prices right across the economy, but for at least some categories of expenditure there is a return to something closer to normal.
“Recent reductions in interest rates and dividends are having an impact on the financial position of many Australian retirees.”
The increase in the cost of retirement compared to last year of 1.8 per cent for couples and 1.6 per cent for singles highlighted the need for the superannuation guarantee to move to 12 per cent, ASFA pointed out.
“Over the year to September 2020, official figures indicate that wages grew by only 1.4 per cent on average for the entire economy and by only 1.3 per cent in the private sector. Over the September quarter, increases in wages in the private sector averaged just 0.1 per cent,” it said.
“Increases in retirement costs are outstripping growth in wages and higher contributions are needed for future retirees to achieve the standard of living they want and deserve in retirement.”
Earlier this month, Association of Independent Retirees president Wayne Strandquist said current deeming rates must be reduced following the most recent interest rate reduction, which had placed greater financial stress on retirees not reliant on the pension.
In October, Pension Boost founder Paul Rogan noted retirees hoping the federal budget would allow them to access more income from the age pension via lower taper rates had been left disappointed.
