18 August 2020
Times are challenging but cost of retirement down in June quarter
The ASFA Retirement Standard June quarter 2020 figures indicate that couples aged around 65 living a comfortable retirement need to spend $61,909 per year and singles $43,687, down 0.8 per cent for couples and by 1.1 per cent for singles on the previous quarter.
“Despite the impact of COVID-19 on Australia’s financial and economic conditions, the cost of living came down for retirees in the June quarter due to a drop in everyday expenses, including petrol, electricity, gas and water,” said ASFA CEO, Dr Martin Fahy.
“Dramatic changes in our lifestyles have had a big impact on demand and prices right across the economy. With fewer of us commuting by road, the price of petrol has plummeted around 20 per cent in the June quarter. At the same time, with so many Australians suspending travel plans and staying at home, the cost of household appliances, furniture and gardening equipment went up.”
The current restrictions on domestic and international travel, along with reduced discretionary spending on entertainment and dining-out may have created a short-term budget saving for some retirees. However, retirees will also be experiencing relatively low investment returns.
“Having sufficient superannuation savings to support the retirement lifestyle that Australians want and deserve is an imperative,” Dr Fahy said.
Older retirees continued to experience financial pressures. Retirement budgets for older retirees, aged around 85, were unchanged at the comfortable level from the previous quarter and down by around 0.2 per cent at the modest level.
The deeper 1.9% June quarter price falls in the All Groups CPI, driven by factors such as a fall in childcare expenses, are not typically relevant to retirement budgets.
Details for the retirement budget price changes
- The price of electricity fell 2.5%
- The price of gas fell 0.9%
- The price of water fell 0.6%
- Health insurance premiums were frozen
- The price of cleaning and maintenance products rose 6.2%
- The price of other non-durable household products rose 4.5% (this includes toilet paper and cleaning wipes)
- The price of furniture rose 3.8%
- The price of major household appliances rose 3.0% (strong demand for products such as home office furniture and fridges and freezers).
- The price of gardening equipment products rose 1.8%
- The price of non-alcoholic beverages rose 2%
- The price of wine rose 1%, beer rose 0.8%,
- The price of food eaten at home rose 0.5%
- The price of take away meals rose 0.3%
Details for the various updated budgets follow.
Table 1: Budgets for various households and living standards for those aged around 65 (June quarter 2020, national)
| Household type | Single Modest | Couple Modest | Single Comfortable | Couple Comfortable |
|---|---|---|---|---|
| Housing – ongoing only | $101.87 | $114.50 | $119.33 | $124.73 |
| Energy | $36.04 | $48.40 | $45.66 | $56.62 |
| Food | $94.52 | $175.23 | $122.20 | $212.39 |
| Clothing | $20.51 | $38.98 | $24.70 | $51.02 |
| Household goods and services | $35.18 | $41.17 | $76.86 | $94.74 |
| Healtd | $50.16 | $96.72 | $102.88 | $192.51 |
| Transport | $83.06 | $88.87 | $135.44 | $147.09 |
| Leisure | $95.24 | $149.95 | $184.68 | $277.65 |
| Communications | $17.97 | $20.24 | $22.47 | $29.25 |
| Total per week | $534.53 | $773.57 | $836.92 | $1,816.00 |
| Total per year | $27,902 | $40,380 | $43,687 | $61,909 |
Table 2: Budgets for various households and living standards for those aged around 85 (June quarter 2020, national)
| Household type | Single Modest | Couple Modest | Single Comfortable | Couple Comfortable |
|---|---|---|---|---|
| Housing – ongoing only | $101.87 | $114.50 | $119.33 | $124.73 |
| Energy | $36.04 | $48.40 | $45.66 | $56.62 |
| Food | $94.52 | $175.23 | $122.20 | $212.39 |
| Clothing | $20.51 | $38.98 | $27.40 | $51.02 |
| Household goods and services | $52.16 | $74.75 | $153.27 | $183.63 |
| Health | $86.34 | $121.00 | $143.49 | $226.81 |
| Transport | $39.99 | $49.98 | $44.99 | $54.98 |
| Leisure | $62.37 | $89.19 | $128.51 | $180.82 |
| Communications | $17.97 | $20.24 | $22.47 | $29.25 |
| Total per week | $511.76 | $732.27 | $807.31 | $1,120.25 |
| Total per year | $26,714 | $38,225 | $42,141 | $58,477 |
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.
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.
For further information, please contact:
Jacqui Maddock, 0451 949 300.
About ASFA
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political, national organisation. ASFA’s mission is to continuously improve the superannuation system, so all Australians can enjoy a comfortable and dignified retirement.
