Retirees are grappling with the challenges of managing their household budgets as the costs of a comfortable retirement rose to historically high levels in the March quarter, according to the Association of Superannuation Funds of Australia (ASFA).
The superannuation industry peak body revealed retirees now face a higher threshold to meet the comfortable retirement standard and in the March quarter the amount needed to reach this level rose by 1.1 per cent, with a total annual increase of 7.7 per cent, hitting a new milestone of $70,482 a year for couples and $50,004 for singles.
“Retiree budgets have been under substantial pressure for over 18 months due to the higher cost of essential goods and services, namely food, fuel and electricity, with the latter up 15 per cent over the past year,” ASFA chief executive Martin Fahy said.
“Self-funded retirees will not be eligible for federal budget measures aimed at relieving cost-of-living pressures and despite recent adjustments to the age pension, payments continue to lag inflation.”
The release of the latest inflation data from the Australian Bureau of Statistics shed light on the increasing costs of essential services, such as medical and hospital care, which experienced significant hikes.
Additionally, gas and electricity prices soared to unprecedented levels in March, placing further strain on the financial situation of households.
Despite the challenges posed by high inflation, Fahy expressed optimism, pointing to several forthcoming developments that are expected to alleviate financial burdens on households.
“Fortunately, we are seeing a turnaround in term deposit income and critically the 1 July increase in the super guarantee (SG) rate to 11 per cent will put a greater number of Australians on track to achieve the dignified retirements they deserve,” she noted.
In a separate announcement, ASFA stated Fahy would be stepping down from his role as chief executive, concluding his seven-year tenure.
ASFA chair Gary Dransfield commended Fahy for his contributions to the organisation during a period that saw important changes, including the COVID-19 early release scheme and the legislated increase to a 12 per cent SG.
“Under Martin’s direction, ASFA has pursued a sophisticated, articulate and evidenced-based approach to advocacy and has driven capability uplift across the sector through its research, thought leadership, professional development and related activities,” Dransfield said.
Fahy thanked the ASFA team and board for their support and recognised the contributions of Dransfield, who has been selected by the board as the interim chief executive.