Retirees squeezed on costs to live ‘comfortably’: ASFA

Increases in medical expenses and insurance premiums have sent the Association of Superannuation Funds of Australia (ASFA) Comfortable Retirement Standard soaring to a record high in the March quarter.

The standard cost to retire comfortably as determined by ASFA has risen by 3.3 per cent in the past 12 months, including 0.7 per cent in the last quarter, to reach $72,663 per year for couples and $51,630 per year for singles.

Medical expenses and insurance premiums saw more of a rise in the March quarter than the December quarter, with medical and hospital services costs increasing by 2.3 per cent (compared to 1.2 per cent) and insurance prices increasing by 3.7 per cent, recording a 16.4 per cent annual rise – the strongest annual rise since 2001.

ASFA said this was due to “higher reinsurance, natural disaster and claims costs” forcing higher premiums for house, home contents and motor vehicle insurance.

“Retirees continue to feel considerable cost of living pressure on their household budgets. Fortunately, in the past three months, we’ve seen the pace of price rises ease somewhat in key spending categories, namely food and fuel,” ASFA CEO, Mary Delahunty, said.

“Ongoing inflationary pressure reinforces the need for Australia’s strong superannuation system which is designed to ensure retirees can achieve a dignified lifestyle in their post-work years, and adequate retirement income to withstand these more challenging times.”

Despite the Energy Bill Relief Fund rebates introduced from July last year, electricity prices have risen by two per cent in the past year, as many self-funded retirees were ineligible to access these rebates. However, as announced in the Budget, they will qualify for rebates to be paid in future quarters. Without the energy relief, electricity prices increased by 17 per cent.