Australian retiree budgets feel inflationary pressure

Increases in fuel prices and healthcare costs have propelled the largest annual rises in Australian retiree budgets in over 10 years, according to data from the Association of Superannuation Funds of Australia (ASFA).

The ASFA Retirement Standard quarterly figures for December last year revealed that couples aged around 65 years need to spend $64,771 per year to live a comfortable retirement, up by 1.5 per cent from the previous quarter.

The budget for singles also rose from the previous quarter by 1.6 per cent to $45,692.

“Australian retirees are now facing significant pressure on their budgets from non-discretionary inflation,” Glen McCrea, Deputy CEO of ASFA, said.

“This means unavoidable price increases on goods and services such as food, petrol and health costs.

“It’s critical that future retirees are able to build sufficient retirement savings to ensure they can have dignity, health, vitality and connection in retirement.”

The annual percentage increases in comfortable budgets were at their highest since 2010, rising by 3.5 per cent for couples and 3.9 for singles in 2021. The ASFA figures also showed an increase in non-discretionary annual inflation, which includes goods and services such as food, automotive fuel and health costs, to higher than the CPI.

Fuel prices rose by 6.6 per cent and motor vehicles prices rose by 1.9 per cent due to the global demand for oil amid supply chain bottlenecks and COVID-19 restrictions. Toilet paper price increases caused the prices of non-durable household products to rise by 3.7 per cent, while domestic travel and holiday accommodation rose by 4.8 per cent after the re-opening of state and territory borders.

Out of pocket health expenses were also high for retirees, with items such as dental treatment, gap payments for procedures in hospitals and COVID-19 rapid antigen tests on the rise.

“It’s so important that future retirees are able to build sufficient savings over their working lives to ensure they can face retirement with financial confidence,” McCrea said.

“Over the last couple of years, the balances of women and low-income earners have been impacted by the acceleration of price increases, COVID-19 and policies such as the early release of super.

“It is crucial that the Government addresses the repair of people’s retirement budgets as we start to see the other side of the COVID-19 crisis.”