The impact of high inflation has been felt across several aspects of day-to-day life, now it seems its reach has extended to the cost of a comfortable retirement.
The latest Association of Superannuation Funds of Australia (ASFA) Retirement Standard found that the rising cost of food, fuel, and electricity prices mean that couples aged around 65 now need $69,691 per year to achieve a comfortable retirement and $49,462 for singles.
Both retiree budgets rose another 2.5 per cent in the final three months of 2022.
The new ASFA Retirement Standard demonstrates the impact of high inflation on retiree budgets as food, fuel, travel and electricity prices drove up the cost of #retirement https://t.co/nq0gWs9Uce pic.twitter.com/dG1nyd6NRy
— ASFA (@asfaAUST) March 20, 2023
Over the past year, retirees have experienced substantial price hikes for essential goods like food, electricity, and automotive fuel.
The spending categories that have seen the most significant annual price increases include:
“Unfortunately, Australians continue to face sharp price increases for essential goods and services,” ASFA CEO, Dr Martin Fahy said.
“Additionally, for retiree households, falling real wages have meant that the Age Pension payments have not benefitted from adjustments linked to wage increases.”
The current financial challenges faced by retirees have also resulted in an upward revision of the superannuation lump sums required to fund a modest or comfortable retirement until the age of 92, according to the latest estimates from ASFA.
For a single retiree, ASFA now calculates that a lump sum of around $595,000 is necessary to sustain a comfortable retirement, representing an increase of approximately 9 per cent from the previous figure of $545,000. Similarly, for a retired couple, the estimated lump sum required has increased by about 7.8 per cent to $690,000, up from the previous estimate of $640,000.
The somber announcement from ASFA comes shortly after an increase to age pension payments that are expected to offer some respite from the financial constraints felt by millions of retirees who have been grappling with the mounting expenses of daily life.
Those on the age pension are among the over 4.7 million Centrelink recipients that will receive a boost to their social security payments when indexation of their payments occurs on Monday, March 20, 2023.
Those who receive the Age Pension, Disability Support Pension, or Carer Payment will receive a fortnightly boost of $37.50, while couples together will receive an additional $56.40.
The maximum fortnightly rate of pension will increase to $1064 for singles and $1604 for couples, including Pension Supplement and Energy Supplement.
Minister for Social Services, Amanda Rishworth, said the Government knows that Australians “are feeling the pinch” and the increase will support those who are “doing it the toughest”.
However, CEO of Council on the Ageing (COTA) Australia, Patricia Sparrow, voiced her concerns that the rise in age pension payments may not adequately address the financial challenges faced by a significant proportion of elderly Australians.
According to her, it is imperative to introduce additional measures such as better rental assistance to provide much-needed relief to senior citizens in coping with their financial obligations.
“A boost to the pension is certainly welcomed, especially at a time when so many older Australians are doing it tough, but it’s certainly not going to solve all of our problems at once,” Sparrow said.