Inflation drives the cost of retirement to a record high

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: 

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)

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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.

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