Australia’s retirees are facing an uphill battle as the cost of a comfortable retirement continues to surge, putting significant pressure on household budgets.
The Association of Superannuation Funds of Australia (ASFA) has found that retirees continue to face significant cost pressures on their household budgets due to high insurance, electricity, and food prices.
According to the latest findings from ASFA, annual expenses for retired couples hit a new high of $72,148, while for singles, it reached $51,278, marking a 3.5 per cent increase for the December quarter of 2023.
“Retiree budgets have been under substantial pressure for the past two years due to the high cost of essential goods and services,” ASFA CEO, Mary Delahunty said.
“Fortunately, we are seeing price increases in the key categories that make up retiree budgets – home and content insurance, fruit and vegetables, fuel and electricity – begin to ease.
“The cost of medical services increased 1.2% in the December quarter, and over the summer months the cost of domestic holiday travel and accommodation rose by 3.9 per cent.”
As essential expenses rise and economic uncertainties loom, retirees face new challenges, highlighting the importance of prudent financial planning for a fulfilling retirement.
A financial plan is essential for a successful retirement as it helps you make informed decisions about your financial future and ensures that you have enough resources to support yourself throughout your retirement years.
Sydney-based Wealth Coach Andrew Woodward from The Investor’s Way, suggested that “to create a plan for your money you first need to understand how much is coming in, and from where, and then how much is going out.”
“Knowing how much is coming in should be relatively straightforward, it will either be in the form of a pension, investment income, superannuation or a combination of all,” he said.
It’s recommended that retirees review their expenses regularly and keep on top of what they have spent in the previous 12 months.
“Once you review what you were spending, you can then anticipate what you need to spend in the coming 12 months,” Woodward advises.
“Anticipating what you need to spend in the coming 12 months, and beyond, requires making some judgements on price increases and your needs, like potentially additional medical expense, and of course the impact of inflation on almost everything.
“Once you have an understanding of the incoming and outgoing of your money, put it into a plan and stick to it.”
There are several ways to put a financial plan into place to manage your retirement and ensure you have adequate funds put away to finance the retirement of your dreams. Founder and CEO of Stockspot, Chris Brycki cited some of the “common approaches” for managing finances in retirement which include: