Retirees feeling housing cost strain

06-Nov-2013

By Caitlin Scarr

Email Article Print Article

Related Articles: | |

A rise in housing-related costs is putting a strain on the budget of Australian retirees, according to the Association of Superannuation Funds of Australia (ASFA).

The ASFA Retirement Standard for the September quarter found retirees would now spend between 1.4 per cent and 1.7 per cent more a year on basic cost of living expenses.

Much of the increase came from rising transport, electricity and housing-related costs, which are a significant portion of many retirees’ budgets.

Electricity costs rose 4.4 per cent, property rates and charges increased by 7.9 per cent, and water and sewerage jumped 9.9 per cent.

Transport costs increased by 7.6 per cent due mainly to rising petrol costs, but food and medical costs remained fairly stable.

Single retirees hoping to live on a modest budget were expected to be the worst-off following the release of the figures, ASFA found.

It is now predicted their expenditure will sit at a minimum of $23,032 in a year, up 1.7 per cent from the previous quarter.

Single retirees eligible for the age pension will require about $50,000 in retirement savings to live modestly, as the full age pension will cover most of the increased living costs.

Single retirees hoping to live comfortably will have to spend at least $41,830 in a year on living and leisure costs, and will need at least $430,000 in retirement savings.

This amount is calculated assuming the retiree will receive at least a partial age pension, increasing to a full age pension if their retirement savings are drawn down.

Couples will fare slightly better, with increased expenditure expected between $33,120 and $57,195 in total a year, based on a modest or comfortable living expectation.

These couples would need total retirement savings of between $35,000 and $510,000 based on the assumption that both retire after the minimum age pension eligibility age.

ASFA chief executive Pauline Vamos urged superannuation policymakers to consider the spending patterns of retirees when examining inflation’s effect on the cost of living.

"This quarter's substantial increase in the cost of items such as electricity, petrol, council and water rates have the potential to hit retirees hard, as they often have less flexibility in their budgets to accommodate additional expenditure in areas where there is less discretionary choice," Vamos said.

« Back to Articles