Living comfortably now costs retirees $1K more each year as living costs spike
Aussies retirees are facing increased financial pressure as the price of every day goods continues to rise steadily, with new figures revealing that couples are being forced to fork out almost $1,000 more per year to maintain their standard of living, while singles are spending an extra $700 on average.
The report compiled by the Association of Superannuation Funds of Australia (ASFA) found that couples and singles alike are having to dip into their hard-earned savings simply to afford daily necessities, while the cost of occasional luxuries, such as a trip overseas, also sees Baby Boomers paying through the nose.
While the rate of inflation has not been extreme, the small, gradual price hike of essential, everyday items such as bread, milk and fruit, as well as services including dental and travel is adding up and leaving retirees out of pocket.
“While the increase in the headline rate of the CPI might not look large, retirees have been facing significant increases in the price of many necessities of life,” ASFA Chief Executive Officer Dr Martin Fahy explained.
Overall, couples are needing to spend $918 more a year, while singles are forking out around $648.
Read more: Coalition to review Australia’s ‘one-size-fits-all’ retirement incomes system
Fahy added: “The drought has impacted on the prices of a range of food, the cost of private health insurance continues to grow at around twice the general rate of inflation and petrol prices are up.”
Over the past 12 months the price of bread has increased by 4.8 per cent, milk by 2.9 per cent and vegetables 6.2 per cent. Meat has seen a massive jump with the cost of beef up by 6 per cent and lamb increased by a huge 13.5 per cent.
However, the biggest difference in cost can be seen with fuel (10.2 per cent), medical and hospital services (2.6 per cent) and sadly, international holiday, travel and accomodation, the cost of which has risen by 2.7 per cent.
Read more: Freezing super guarantee will leave another generation languishing on pension: Expert
To cope with the added expense boomers are having to boost their budgets, despite no longer earning a living through employment, with couples aged around 65 spending roughly $61,522 a year on household and living purchases. This is compared to singles who are having to spend an average of $43,601 a year to get by comfortably.
The latest information comes after it was revealed that Generation X are holding out for a retirement that is more lavish than those who have already ended their careers.
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A previous survey, conducted by the Association of Superannuation Funds of Australia (ASFA), found that almost half of Gen Xers – those aged between 39 and 53 – intend to spend more than the current retirement standards outlined by ASFA, which recommend an annual income of $43,255 for a single person, or $61,061 for a couple, to live comfortably.
A total of 47.7 per cent of those in Generation X said they “want to be able to spend more than the ASFA comfortable standards budget”, compared to just 37.2 per cent of Baby Boomers.
Read more: Gen X expect to live more lavishly in retirement than ‘comfortable’ Baby Boomers
The findings also revealed that an overall majority of Aussies share a common concern about the adequacy of the Age Pension. Just 5.3 per cent of survey respondents from Generation Y (those aged 38 and below) believe the age pension alone will meet their needs in retirement compared to 5 per cent of Generation X (aged 39 to 53).
However, for older Australians who may be nearing retirement or have already bid farewell to their careers, the full pension amount of around $24,150 for a single person and $34,400, was slightly more sufficient, with 10.9 per cent of Pre Boomers (aged 74 and above) admitting the “Age Pension alone would be sufficient”, along with 6.5 per cent of Baby Boomers.
Have you felt the pressure of steady price increases of everyday goods and luxuries? How are you managing to get by comfortably?
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.
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