25 February 2019
Mixed news on cost of living for Australia’s retirees
There was a small average increase in the cost of living in the December quarter for retirees, despite significant cost rises in some essential goods and services including medical, postage and meat prices.
The ASFA Retirement Standard December quarter figures reveal couples aged around 65 would need to spend $60,977 per year and singles $43,317, to live a comfortable retirement: up 0.2 and 0.3 per cent respectively on the September quarter figures (see table 1 below).
ASFA CEO Dr Martin Fahy commented:
“The fact that the cost of retirement over the most recent quarter only increased by a relatively small amount is welcome news for retirees as prices have been increasing for a number of essentials. The costs for what could be called ‘traditional expenses’ for retirees have risen at a rate higher than the overall rise in the CPI.”
At the modest level the increase was 0.2 per cent for singles and 0.3 per cent for couples. These various increases are lower than the 0.5 per cent increase in the All groups CPI; the 9.4 per cent increase in tobacco excise in the December quarter was responsible for a substantial part of this increase in CPI over the quarter. ASFA does not include tobacco in the retirement budget calculations.
Older retirees aged around 85, experienced an average cost of living increase of around 0.3 per cent at thecomfortable level and 0.2 per cent at the modest level (see table 2 below).
Dr Fahy said price increases varied depending on the lifestyle of the individual retiree.
“Australia’s grey nomads experienced significant price increases due to increased costs for domestic holiday travel and accommodation, and a 6.7 per cent increase in fuel costs. Supply shortages caused by the ongoing drought also led to significant cost increases for fruits, meat and seafood, with lamb in particular up a staggering
11.2%.
“On the other hand, retirees living what could be described as a more urban lifestyle experienced only modest expense increases, with the cost of wine down 0.4 per cent over the year. In good news for technophile retirees, computing and AV equipment prices have also dropped slightly by 1.5%, while telecommunication costs have fallen by 4.7 per cent.”
While the overall rate of inflation was relatively low, some costs grew strongly over the year to the December quarter 2018. More specifically:
- Medical and hospital expenses rose by 4.2 per cent
- The cost of domestic holidays rose by 6.2 per cent
- Postal charges by 10.4 per cent
- Beer by 3.5 per cent
- Spirits by 2.5 per cent
- Eating out by 2.0 per cent
- Hairdressing by 3.2 per cent
- Gas and other household fuels by 3.2 per cent
- Automotive fuel by 6.7 per cent
- Urban transport fares by 2.5 per cent
- A continuation of the current drought and increases in production costs also are likely to put upward pressure on food costs in the year ahead, with the price of lamb up by 11.2 per cent and the price of fish by 3.3 per cent
Other significant price increases include domestic holiday travel and accommodation (+6.2%), and fruit (+5.0%). The most significant offsetting price falls for this quarter were for automotive fuel (-2.5%), audio visual and computing equipment (-3.3%), wine (-1.9%), and telecommunications equipment and services (-1.5%).
The main contributors to the rise in the food and non-alcoholic beverages group this quarter are fruit (+5.0%), due to seasonal rises in lemons, apples, bananas and strawberries. Meat and seafoods (+1.6%), have been impacted by drought conditions in the eastern states, impacting supply and prices, particularly for lamb and goat (+6.8%).
Table 1: Budgets for various households and living standards for those aged around 65 (December quarter 2018, national)
| Household type | Single Modest | Couple Modest | Single Comfortable | Couple Comfortable |
|---|---|---|---|---|
| Housing – ongoing only | $99.34 | $111.70 | $116.33 | $121.61 |
| Energy | $37.80 | $50.77 | $47.89 | $59.39 |
| Food | $89.92 | $166.70 | $116.26 | $202.07 |
| Clothing | $20.36 | $38.69 | $27.20 | $50.65 |
| Household goods and services | $33.49 | $39.29 | $73.56 | $90.51 |
| Health | $48.14 | $92.85 | $98.81 | $184.97 |
| Transport | $88.60 | $94.62 | $144.60 | $156.87 |
| Leisure | $93.06 | $145.98 | $181.46 | $271.20 |
| Communications | $18.96 | $21.36 | $23.72 | $30.87 |
| Total per week | $529.66 | $761.97 | $829.82 | $1,168.13 |
| Total per year | $27,648 | $39,775 | $43,317 | $60,977 |
Table 2: Budgets for various households and living standards for those aged around 85 (December quarter 2018, national)
| Household type | Single Modest | Couple Modest | Single Comfortable | Couple Comfortable |
|---|---|---|---|---|
| Housing – ongoing only | $99.34 | $111.70 | $116.33 | $121.61 |
| Energy | $37.80 | $50.77 | $47.89 | $59.39 |
| Food | $89.92 | $166.70 | $116.26 | $202.07 |
| Clothing | $20.36 | $38.69 | $27.20 | $50.65 |
| Household goods and services | $51.18 | $73.29 | $149.90 | $179.51 |
| Health | $82.80 | $116.11 | $137.72 | $217.83 |
| Transport | $39.74 | $49.67 | $44.70 | $54.63 |
| Leisure | $59.53 | $85.24 | $124.73 | $173.50 |
| Communications | $18.96 | $21.36 | $23.72 | $30.87 |
| Total per week | $499.62 | $713.53 | $788.44 | $1,090.05 |
| Total per year | $26,080 | $37,246 | $41,156 | $56,901 |
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:
Katrina Horrobin, 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.
