4 March 2021
Cost of retirement up in December quarter as health insurance, domestic holiday prices rise
The Association of Superannuation Funds of Australia (ASFA) Retirement Standard December quarter 2020 figures indicate that couples aged around 65 living a comfortable retirement need to spend $62,562 per year and singles $44,224, both up by 0.9 per cent on the previous quarter.
Older retirees are continuing to experience financial pressures, with retirement budgets for those aged around 85 up by around 0.9 per cent from the previous quarter for couples and by around 1.0 per cent for singles.
“COVID-19 impacted on just about every aspect of Australia’s financial and economic conditions. Now, price increases are returning to a more standard pattern following a few quarters of suspension or delay in key costs, such as health insurance premiums,” said ASFA Deputy CEO, Glen McCrea.
Health insurance premiums remained unchanged for much of the year, but increased from 1 October by around 3 per cent for many retirees. There are now 2.2 million Australians aged over 65 with private health insurance, up from 2.0 million just three years earlier.
“As a greater number of people ventured out of their homes in search of a meal out or a domestic holiday, we saw price rises in those areas, which is not altogether favourable for retirees on a budget.”
During the quarter there was a 6.3 per cent increase in the price of domestic holiday travel and accommodation, in response to the opening of State and Territory borders (at least for a time) and commencement of the peak summer period.
There was a 1.1 per cent increase in the price of meals out and takeaway foods, in part due to more consumers being able to dine at restaurants.
However, there are still significant differences in retiree lifestyles compared to the December quarter 2019. No retirees are travelling overseas for a holiday with at least some expenditure normally devoted to such recreation activity shifted to purchasing furniture, appliances and home improvements.
The overall increase in the December quarter All Groups CPI of 0.9 per cent was very similar to the average price increases for retirees. However, there were different factors at work for retirees relative to the overall population. For instance, the retiree budgets are not affected by the significant rises in the price of child care.
Details for the retirement budget price changes
- Fruit prices were up by 3.4 per cent, with beef and veal up by 3.0 per cent. However, there was a 6.0 per cent fall in the price of vegetables due to easing drought conditions. Annually the food group rose by 2.3 per cent.
- Western Australian retirees benefitted from a $600 household electricity credit but electricity prices were generally flat elsewhere in the country.
- There was a return to regular discounting cycles on products such as toilet paper, cleaning products and bedroom furniture as demand returned from elevated levels.
- There was an increase in the price of motor vehicles in the quarter of 1.8 per cent due to supply disruptions and increased demand for cars given concerns about use of public transport.
Details for the various updated budgets follow.
Table 1: Budgets for various households and living standards for those aged around 65 (December quarter 2020, national)
| Household type | Single Modest | Couple Modest | Single Comfortable | Couple Comfortable |
|---|---|---|---|---|
| Housing – ongoing only | $102.23 | $114.89 | $119.90 | $125.23 |
| Energy | $35.80 | $48.08 | $45.35 | $56.24 |
| Food | $94.35 | $174.92 | $121.99 | $212.02 |
| Clothing | $20.38 | $38.73 | $27.23 | $50.70 |
| Household goods and services | $34.56 | $40.49 | $77.17 | $94.84 |
| Health | $50.47 | $97.52 | $103.40 | $193.75 |
| Transport | $86.76 | $92.74 | $141.53 | $153.62 |
| Leisure | $97.52 | $153.06 | $188.42 | $283.19 |
| Communications | $17.76 | $20.01 | $22.21 | $28.91 |
| Total per week | $539.84 | $780.43 | $847.20 | $1,198.51 |
| Total per year | $28,179 | $40,739 | $44,224 | $62,562 |
Table 2: Budgets for various households and living standards for those aged around 85 (December quarter 2020, national)
| Household type | Single Modest | Couple Modest | Single Comfortable | Couple Comfortable |
|---|---|---|---|---|
| Housing – ongoing only | $102.23 | $114.89 | $119.90 | $125.23 |
| Energy | $35.80 | $48.08 | $45.35 | $56.24 |
| Food | $94.35 | $174.92 | $121.99 | $212.02 |
| Clothing | $20.38 | $38.73 | $27.23 | $50.70 |
| Household goods and services | $52.55 | $75.28 | $155.52 | $186.13 |
| Health | $87.54 | $122.39 | $145.01 | $228.89 |
| Transport | $40.31 | $50.39 | $45.35 | $55.42 |
| Leisure | $63.33 | $90.85 | $131.32 | $184.26 |
| Communications | $17.76 | $20.01 | $22.21 | $28.91 |
| Total per week | $514.26 | $735.53 | $813.86 | $1,127.80 |
| Total per year | $26,844 | $38,395 | $42,484 | $58,871 |
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.
