Media Release

Inflation drives the cost of retirement to a record high

26 May 2023

Inflation drives the cost of retirement to a record high 

Retirees continue to face significant upward pressure on their household budgets amid historically high consumer price inflation. 

The annual expenditure needed to reach ASFA’s comfortable retirement standard rose another 1.1 per cent in the March quarter to hit a record high of $70,482 per year for couples, and $50,004 for singles, taking the annual increase to 7.7 per cent. 

“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 year,” said ASFA CEO, Dr Martin Fahy. 

“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. 

During the March quarter, medical and hospital services costs rose 4.2%, the price of pharmaceutical products rose by 4.5% and insurance costs were up a further 3.5%.  

The ASFA comfortable standard includes the cost of everyday expenses such as health, communication, clothing and household goods and reflects community expectations as well as changing lifestyle expectations and spending habits. 

“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,concluded Dr Fahy.   

 

Spending categories showing largest quarterly price increases: 

  • Medical and hospital services rose 4.2% in the quarter and 5.3% over 12 months 
  • Insurance costs were up 3.5% in the quarter 
  • Fruit and vegetables rose 2.4% in the quarter 
  • The price of pharmaceutical products rose by 4.5% and the increase would have been even greater without the reduction in the PBS general patient co-payment applying from 1 January 
  • Domestic travel and accommodation rose 4.7% in the March quarter and 25.0% over the year  
  • International travel and accommodation fell by 8.2% in the March quarter as many destinations entered their off-peak season but was up by 38.3% over the year 
  • Fruit and vegetables rose 2.4% in the quarter 
  • Food and meals out rose by 8.0% over the year   
  • The annual increase in gas prices of 26.2% was the highest on record, with an annual increase of 15.5% for electricity. 

Details for the various updated budgets follow.

Table 1: Budgets for various households and living standards for those aged around 65 (March quarter 2023, national)

 
 
 
 
 
 

Household type 

 
 
 
 

Single Modest 

 
 
 
 

Couple Modest 

 
 
 
 

Single Comfortable 

 
 
 
 

Couple Comfortable 

 
 
 
 

Housing – ongoing only 

 
 

$111.29 

 
 

$125.13 

 
 

$130.96 

 
 

$136.61 

 
 
 
 

Energy 

 
 

$39.21 

 
 

$52.67 

 
 

$49.68 

 
 

$61.61 

 
 
 
 

Food 

 
 

$106.63 

 
 

$197.69 

 
 

$137.87 

 
 

$239.62 

 
 
 
 

Clothing 

 
 

$20.83 

 
 

$39.60 

 
 

$27.83 

 
 

$51.83 

 
 
 
 

Household goods and services 

 
 

$38.67 

 
 

$45.29 

 
 

$84.35 

 
 

$104.21 

 
 
 
 

Health 

 
 

$55.03 

 
 

$106.35 

 
 

$112.01 

 
 

$209.64 

 
 
 
 

Transport 

 
 

$106.42 

 
 

$113.32 

 
 

$173.91 

 
 

$188.33 

 
 
 
 

Leisure 

 
 

$112.90 

 
 

$177.31 

 
 

$218.92 

 
 

$329.19 

 
 
 
 

Communications 

 
 

$17.92 

 
 

$20.19 

 
 

$22.41 

 
 

$29.17 

 
 
 
 

Total per week 

 
 

$608.91 

 
 

$877.55 

 
 

$957.94 

 
 

$1,350.23 

 
 
 
 

Total per year 

 
 

$31,785 

 
 

$45,808 

 
 

$50,004 

 
 

$70,482 

Table 2: Budgets for various households and living standards for those aged around 85 (March quarter 2023, national)

 
 
 
 
 
 

Household type 

 
 
 
 

Single Modest 

 
 
 
 

Couple Modest 

 
 
 
 

Single Comfortable 

 
 
 
 

Couple Comfortable 

 
 
 
 

Housing – ongoing only 

 
 

$111.29 

 
 

$125.13 

 
 

$130.96 

 
 

$136.61 

 
 
 
 

Energy 

 
 

$39.21 

 
 

$52.67 

 
 

$49.68 

 
 

$61.61 

 
 
 
 

Food 

 
 

$106.63 

 
 

$197.69 

 
 

$137.87 

 
 

$239.62 

 
 
 
 

Clothing 

 
 

$20.83 

 
 

$39.60 

 
 

$27.83 

 
 

$51.83 

 
 
 
 

Household goods and services 

 
 

$56.83 

 
 

$81.59 

 
 

$167.33 

 
 

$200.68 

 
 
 
 

Health 

 
 

$96.65 

 
 

$134.27 

 
 

$158.73 

 
 

$249.10 

 
 
 
 

Transport 

 
 

$42.25 

 
 

$52.81 

 
 

$47.53 

 
 

$58.09 

 
 
 
 

Leisure 

 
 

$71.17 

 
 

$103.08 

 
 

$150.74 

 
 

$209.62 

 
 
 
 

Communications 

 
 

$17.92 

 
 

$20.19 

 
 

$22.41 

 
 

$29.17 

 
 
 
 

Total per week 

 
 

$562.79 

 
 

$807.03 

 
 

$893.07 

 
 

$1,236.33 

 
 
 
 

Total per year 

 
 

$29,378 

 
 

$42,127 

 
 

$46,618 

 
 

$64,536 

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.

iConsumer Price Index, Australia, March 2023 | Australian Bureau of Statistics (abs.gov.au)


For further information, please contact:
ASFA Media team, 0451 949 300

About the ASFA Retirement Standard

Since 2004 the ASFA Retirement Standard has served as a retirement companion for Australians, providing a reliable retirement savings guide by benchmarking the annual budget needed to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, reviewed regularly to reflect changes in lifestyle, and provides detailed budgets of what single people and couples would need to spend to support their chosen lifestyle.

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.


   

Derek Thompson

Via live link

Best Selling Author, Podcast Host of 'Plain English'

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He shares a compelling vision of a future where we have more than enough for everybody, and a practical, actionable roadmap for how to get there. It starts with taking more risks, building more expansively, and recognizing that we all have the power to create a world of abundance. “Everything’s utopian until it’s reality,” he says.

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Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

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Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

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Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

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Assistant Treasurer and Minister for Financial Services

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Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.