The ASFA Retirement Standard figures released for the March quarter indicate that couples aged around 65 living a comfortable retirement need to spend $65,445 per year and singles $46,494 per year. This is an increase of 1.0 per cent and 1.2 per cent respectively on the previous quarter.
ASFA stated that the annual percentage increased for the comfortable retirement budget are the largest since 2010.
“Over the year to March 2022, prices were up by around 4.2 per cent for the comfortable couple budget and by 4.7 per cent for the comfortable single budget,” it noted.
ASFA deputy chief executive Glen McCrea said the while this is marginally smaller than the annual inflation impact of 5.1 per cent for wage earners, the reality is that retirees are doing it tough too.
Over the year to March 2022 the Age Pension increased by 3.7 per cent, and Age Pensioners and Seniors Health Card holders also benefitted from a $250 one-off payment in
April 2022. Additionally, there was a reduction in the minimum drawdown factor for retirees with a superannuation account-based income stream. While that reduction is welcomed by at least some retirees, others need to draw down more than the minimum in order to meet living costs.
However, ASFA noted that the percentage increases in the budgets for those aged around 65 were less than the increase in the March quarter All Groups CPI of 2.1 per cent and 5.1 per cent compared to a year earlier.
“Retirees have faced significant price increases for non-discretionary items such as food, automotive fuel, and health costs,” said Mr McCrea.
Retirement budgets for those aged around 85 were up by 1.2 per cent from the previous quarter.
ASFA said that the older retiree budgets were not directly affected by the increase in petrol prices, which were significant in the March quarter, as there is no allowance for car ownership for this age group.
However, older retirees are facing other increases in costs including food and medical costs. Rising petrol prices also feed into the cost of goods and services purchased by older retirees.
“The rising cost of living in retirement highlights the need for compulsory superannuation to increase to 12 per cent of wages by 2025,’ said Mr McCrea.
