The cost of living for retirees to have a comfortable retirement has increased by around 2 per cent over the past quarter and by more than 6 per cent in the past year, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA released its quarterly Retirement Standard for the June quarter 2022, which stated couples aged around 65 would need to spend $66,725 a year for a comfortable retirement and singles would need to spend $47,383, an increase of 2 per cent and 1.9 per cent, respectively, on the previous quarter.
These increases follow on from those recorded for the March quarter 2022 when the cost of living figures rose by 1 per cent for couples and 1.2 per cent for singles compared to the previous quarter. Those changes were the largest March quarter increases since 2010.
The superannuation industry peak body noted the annual increase in costs for the year to the end of June was 6.2 per cent for a couple and 6.7 per cent for a single person, and the percentage rises for those aged around 65 were only slightly above the quarterly increase in the June quarter all groups consumer price index of 1.8 per cent and the annual change of 6.1 per cent.
ASFA deputy chief executive Glen McCrea said there had been significant price increases for non-discretionary items such as food, automotive fuel and health costs, as well as a rise in the cost of private health insurance from 1 April.
“While there is considerable subsidisation of health costs and benefits being paid from private health insurance, out-of-pocket expenses remain substantial for items such as dental treatment, optical expenses and gap payments for procedures in hospitals,” McCrea said.
“Private health insurance premiums rose on average by 2.7 per cent from 1 April with some major insurers increasing premiums by more than 3 per cent.”
ASFA highlighted the increase in costs for those aged around 85 was 0.8 per cent from the previous quarter as this group was less affected by the sharp rise in petrol prices in the June quarter and no allowance was made for car ownership or overseas travel for this age group.
The association noted some of the increase in the cost of living was being met by superannuation, with more retirees benefiting from long-term compulsory super.
It stated Department of Social Services figures show only around 40 per cent of those currently aged between 66 and 70 receive the age pension and superannuation has been successful in boosting retirement incomes and limiting the age pension bill for the government.
“Despite the challenges of recent years, superannuation continues to achieve its objective of materially lifting the standard of living of older Australians and allowing more retirees to achieve the dignity they deserve in retirement,” McCrea said.
