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Inflation drives the cost of retirement to a record high

Media Release 26 May 2023

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.


   

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