Inflation sends retirement costs skyrocketing

Yasmine Raso

Senior Journalist, Financial Newswire

29 May 2023

New figures from the Association of Superannuation Funds of Australia (ASFA) have shown the rate at which inflationary pressures are cutting into retirement costs and household budgets.

The annual spending needed to satisfy the ASFA comfortable retirement standard has risen for the March quarter by 1.1 per cent, hitting a record high of $70,482 a year for couples and $50,004 a year for singles.

This means the annual increase jumps to 7.7 per cent.

“Retiree budgets have been under substantial pressure for over 18 months due to the higher cost of essential goods and services, namely food, fuel and electricity, with the latter up 15 per cent over the past year,” outgoing ASFA CEO, Dr Martin Fahy, said.

“Self-funded retirees will not be eligible for Federal Budget measures aimed at relieving cost-of-living pressures, and despite recent adjustments to the Age Pension, payments continue to lag inflation.

“Fortunately, we are seeing a turnaround in term deposit income, and critically, the 1 July increase in the Super Guarantee (SG) rate to 11 per cent will put a greater number of Australians on track to achieve the dignified retirements they deserve.”

The data also showed the highest spending categories reporting the largest quarterly price increase included domestic travel and accommodation (4.7 per cent), pharmaceutical products (4.5 per cent), medical and hospital services (4.2 per cent), insurance (3.5 per cent), fruit and vegetables (2.4 per cent).

Gas prices also recorded an annual increase of 26.2 per cent, its highest on record, while electricity saw an annual rise of 15.5 per cent.