How much a comfortable retirement will now cost Aussie retirees

While a recent reduction in electricity prices has provided some financial relief for retirees during the ongoing cost of living crisis, the cost of funding a comfortable retirement has seen a slight increase over the last year.

The cost of a comfortable retirement lifestyle rose by around 1.3 per cent over the last 12 months – just over half of the Consumer Price Index increase of 2.4 per cent over the same period.

According to the latest data from the Association of Superannuation Funds of Australia (ASFA), couples aged around 65 now need $73,077 per year to achieve a comfortable retirement, while singles will require $51,805 after both retiree budgets rose by 0.1 per cent in the December quarter.

ASFA CEO, Mary Delahunty said that although prices have increased, there was some “good news” with “a substantial easing in price increases for the goods and services” older adults purchase

“However, the last couple of years of high inflation are still weighing on their ability to fund a comfortable retirement,” Delahunty added.

Pharmaceutical products have seen a 1.6 per cent price drop, providing some relief for retirees, thanks to an increase in the number of consumers who qualify for subsidies under the Pharmaceutical Benefits Scheme (PBS). The wider adoption of 60-day prescriptions has also helped reduce the cost of some prescription medicines.

However, other essentials continue to rise. Food prices rose 3.0 per cent over the 12 months to the December quarter, slightly down from 3.3 per cent in the September quarter. Fruit and vegetable prices remained 6.3 per cent higher compared to 12 months ago, despite falling 3.3 per cent this quarter.

Domestic holiday travel and accommodation saw an increase of 5.7 per cent due to rising travel demand during the school holiday period, which drove up prices for airfares and accommodation.

A trip to the local pub also got more expensive, with beer prices rising 1.2 per cent in the quarter and spirits up 1.1 per cent.

While some costs, such as pharmaceuticals have eased, the overall financial pressure continues to build for retirees.

This is particularly concerning, as a recent report reveals that many retirees are already facing financial stress, with the Age Pension no longer enough to cover even their basic needs.

This alarming trend came to light in the latest Cost of Living Longer Report 2024, commissioned by Australian Seniors in partnership with research group MyMavins.

The study surveyed over 1,000 Australians aged 50 and above, revealing the impact of inflation and rising costs on those relying on the age pension.

Alarmingly, the study found that nearly three in five (58 per cent) are facing moderate to severe financial challenges due to rising costs, with one in 10 (10 per cent) experiencing severe difficulties.

With the cost of living continuing to climb, seven in 10 (69 per cent) now fear that the age pension alone will not be enough to live on.

The financial strain has left nearly three in five (59 per cent) struggling to pay for essentials such as utilities and groceries.

Even more concerning, one in five (20 per cent) have delayed or forgone medical treatment due to costs, placing their health at risk.

Understandably, these difficulties are taking an emotional toll, with around two in five (43 per cent) reporting a decline in their quality of life over the past two years. For 21 per cent, this decline has been considerable or severe.

Carolyn McColl, President of the Board for Meals on Wheels NSW, expressed deep concern over the findings, calling for urgent action.

“The aged pension is no longer sufficient to meet basic living expenses, with rising costs forcing many elderly Australians to make significant sacrifices,” McColl said.

“Since the onset of COVID-19, nearly every aspect of daily life — groceries, utilities, fuel, council rates — has seen substantial price increases, leaving little to no room for essentials such as medical care or social engagement.

“Some are unable to afford heating during winter, while others rely on Meals on Wheels for affordable, balanced meals. Urgent action is needed to address this issue —either through a reduction in living costs or an increase in the aged pension— to ensure older Australians are treated with the respect and care they deserve, rather than being left behind.”