Media Releases

7 November 2019

The drought beginning to bite on daily retiree living costs

The ASFA Retirement Standard September quarter 2019 figures indicate that couples aged around 65 living a comfortable retirement need to spend $61,786 per year and singles $43,787, up 0.4 per cent for each on the previous quarter. At the modest level there was an 0.4 per cent increase for singles and a 0.3 per cent increase for couples.

These various changes are more or less in line with the All groups CPI 0.5 per cent increase between the June and September quarters.

Over the year to the September quarter 2019 costs were up around 1.5 per cent for couples at both the comfortable and modest levels, compared to the 1.7 per cent increase in the All Groups CPI. This equates at the comfortable level to couples needing to spend $943 more a year, and for singles the amount is $587.

Budgets for older retirees rose from the previous quarter by around 0.4 per cent at the comfortable level and by 0.5 per cent at the modest level.

"While the increase in the headline rate of the CPI might not look large, the drought is starting to impact on the prices paid by retirees" explained Dr Martin Fahy, chief executive officer, Association of Superannuation Funds of Australia.

“There also has been increases in the cost of motor vehicles and international travel, in part driven by the decline in the Australian exchange rate.”

“Even with inflation running at a low rate many retirees will be in retirement for 25 years or more and need to take into account future price increases and spending needs.

“With the low rate of overall inflation, the Age Pension is only increasing at a modest rate, with the maximum Age Pension increasing by 1.9 per cent over the last 12 months to September to reach $24,335 a year for a single person (including allowances). The Age Pension is less than what is needed to support even a modest standard of living in retirement.”

“Having sufficient savings in superannuation to support the lifestyle Australians want and deserve in retirement is an imperative. Moving to 12% for the Superannuation Guarantee is a necessity for those not yet retired given that many Australians still do not have substantial superannuation balances.

“The median account balance for those in the 60 to 64 age group is $154,450 for males and only $122,850 for women.”

The costs for retirees that increased substantially over the last 12 months largely as a result of the drought are:

  • Price of beef up by 7.1 per cent and lamb up by 14.3
  • Price of milk up by 6.7 per cent
  • Breakfast cereals by 6.4 per cent
  • Poultry prices by 5.3 per cent
  • Price of eggs up by 4.5 per cent
  • Price of bread up by 3.6 per cent
  • Price of cheese up by 3.4 per cent

The lower Australian dollar exchange rate has also impacted on certain costs although other factors have also been at work over the last 12 months:

  • Price of international holiday travel and accommodation up by 5.8 per cent
  • Price of domestic holidays up by a very modest 0.7 per cent and a 1.6 per cent increase in the cost for camping and open-air recreation
  • Price of motor vehicles up by 3.2 per cent

Details for the various updated budgets follow.

Table 1: Budgets for various households and living standards for those aged around 65 (September quarter 2019, national)

Household type Single Modest Couple Modest Single Comfortable Couple Comfortable
Housing – ongoing only $101.17 $113.68 $118.45 $123.82
Energy $36.71 $49.30 $46.50 $57.67
Food $91.09 $168.87 $117.77 $204.69
Clothing $20.71 $39.35 $27.66 $51.51
Household goods and services $33.42 $39.29 $73.63 $90.69
Health $49.58 $95.67 $101.69 $190.41
Transport $89.72 $95.83 $146.41 $158.85
Leisure $93.92 $147.24 $183.66 $276.00
Communications $18.43 $20.76 $23.05 $30.00
Total per week $534.73 $770.00 $838.82 $1,183.65
Total per year $27,913 $40,194 $43,787 $61,786

Table 2: Budgets for various households and living standards for those aged around 85 (September quarter 2019, national)

Household type Single Modest Couple Modest Single Comfortable Couple Comfortable
Housing – ongoing only $101.17 $113.68 $118.45 $123.82
Energy $36.71 $49.30 $46.50 $57.67
Food $91.09 $168.87 $117.77 $204.69
Clothing $20.71 $39.35 $27.66 $51.51
Household goods and services $51.19 $73.37 $150.07 $179.82
Health $85.49 $119.76 $142.01 $224.46
Transport $40.56 $50.70 $45.63 $55.77
Leisure $61.36 $87.71 $126.03 $177.54
Communications $18.43 $20.76 $23.05 $30.00
Total per week $506.70 $723.51 $797.18 $1,105.28
Total per year $26,450 $37,767 $41,613 $57,696

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.