Media Releases

18 February 2020

Retirees face an acceleration in the rise of living costs

The ASFA Retirement Standard December quarter 2019 figures indicate that couples aged around 65 need to spend $62,269 per year and singles $44,146, up 0.8 per cent for each on the previous quarter.

These various changes are slightly more than the increase in the All groups CPI of 0.7 per cent between the September and December quarters.

Over the year to the December quarter 2019 costs were up around 2.1 per cent for couples compared to the 1.8 per cent increase in the All Groups CPI. This equates at the comfortable level to couples needing to spend $1,292 more a year, and for singles the amount is $829.

"Cost increases for retirees have exceeded those for the general population and we’ve also seen an acceleration in the rate of increase in retirement expenses.

The drought has impacted on prices paid by retirees for food and there also have been other significant price increases" explained Dr Martin Fahy, chief executive officer, Association of Superannuation Funds of Australia (ASFA).

“While the recent rains are very welcome, meat prices are likely to increase even further as farmers hold back their breeding stock from the market.”

The impact of the drought is even clearer in the figures for the increase in prices between the September quarter 2019 and the December quarter 2019. Over the three-month period there was a 6.8 per cent rise in fruit prices and a 2.9 per cent rise for beef and veal. Drought conditions impacted on the prices for a range of other fresh produce including grapes, melons, onions, potatoes, eggs, rice and prawns

The overall cost of food increased by 2.6 per cent over the past 12-months, largely as a result of the drought, but the prices of some foods increased even more:

  • Price of beef up by 8.2 per cent and pork up by 7.9 per cent
  • Price of vegetables up by 3.7 per cent
  • Vegetarians also faced a 2.8 per cent increase in price of cereal products
  • Price of milk up by 6.4 per cent and cheese by 5.7 per cent
  • Bread prices up by 3.1 per cent and cake prices up by 4.5 per cent
  • Poultry prices by 3.2 per cent
  • Price of eggs up by 5.2 per cent
  • Take away food prices up 2.4 per cent, affected by rising ingredients costs

ASFA’s Retirement Standard budgets assume retirees own their homes. Home ownership costs have also gone up:

  • Home maintenance costs have increased by 2.7 per cent
  • Water and sewerage charges increased by 2.9 per cent
  • Property rates increased by 2.5 per cent

Rents were up by only 0.2 per cent on average over the year, but renters have much higher housing costs in retirement than homeowners.

The costs of automotive fuel were also up by 2.9 per cent over the year. ASFA’s Retirement Standard budgets assume car ownership.

There also was variation between State and Territory capitals in the rate of price increases over the year. Prices on average increased by only around 0.5 per cent over the year in Darwin, but by around 2.7 per cent in Hobart. Price increases in the other capitals were closer to the national average. The cost of living in Hobart has been particularly affected by a strong increase in the cost of domestic holidays due to increased tourist demand in Tasmania.

Details for the various updated budgets follow.

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

Household type Single Modest Couple Modest Single Comfortable Couple Comfortable
Housing – ongoing only $101.49 $114.05 $118.83 $124.22
Energy $36.47 $48.98 $46.20 $57.29
Food $92.26 $171.04 $119.28 $207.32
Clotding $20.64 $39.23 $27.57 $51.34
Household goods and services $33.58 $39.45 $73.86 $91.01
Healtd $49.38 $95.31 $101.27 $189.66
Transport $91.11 $97.28 $148.70 $161.30
Leisure $96.40 $151.12 $187.18 $281.04
Communications $18.25 $20.55 $22.82 $29.70
Total per week $539.56 $777.02 $845.72 $1,192.90
Total per year $28,165 $40,560 $44,146 $62,269

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

Household type Single Modest Couple Modest Single Comfortable Couple Comfortable
Housing – ongoing only $101.49 $114.05 $118.83 $124.22
Energy $36.47 $48.98 $46.20 $57.29
Food $92.26 $171.04 $119.28 $207.32
Clothing $20.64 $39.23 $27.57 $51.34
Household goods and services $51.78 $74.25 $151.83 $181.94
Health $85.24 $119.38 $141.53 $223.66
Transport $40.60 $50.75 $45.67 $55.82
Leisure $62.28 $89.30 $129.14 $181.12
Communications $18.25 $20.55 $22.82 $29.70
Total per week $509.00 $727.52 $802.87 $1,112.43
Total per year $26,570 $37,977 $41,910 $58,069

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.