Retirement cost surge: 10 painful price rises as inflation attacks

Soaring inflation has pushed up retirement costs significantly and many seniors don’t have extra income pay for the price rises.

Cost of living increases for retirees are outpacing age pension rises, as surging fuel and food prices push the price of a comfortable retirement above $65,000 a year for the first time.

Higher inflation is hitting household budgets everywhere, but extra pain is inflicted on seniors who are on fixed incomes and unable to work more to offset the price crunch.

New data from the Association of Superannuation Funds of Australia (ASFA) shows a retired couple aged 65-85 wanting a comfortable lifestyle now needs to spend $1253.73 a week – $65,445 annually – while a single has to spend $890.68 weekly or $46,494 annually.

Even a modest lifestyle – with fewer small luxuries, less dining out and no overseas travel – now costs a couple $42,621 and a single $29,632 a year, the ASFA Retirement Standard says.

It says a comfortable retirement budget rose 4.2 per cent for couples and 4.7 per cent for singles in the year to March 31, below the official 5.1 per cent inflation rate but above the age pension increase of 3.7 per cent for the same period.

Fuel was the biggest culprit, up 11 per cent, while staples such as fruit, vegetable, meat and toilet paper rose more than 6 per cent.

Some fresh fruit and vegetable prices have doubled.

“Obviously petrol prices are having an impact, and making life tough for retirees,” ASFA deputy CEO Glen McCrea said.

“It’s fair to say that the inflation genie is out of the bottle, and it’s really hard to get back in,” he said.

“Inflation is tough and there’s often no easy answers … what it does mean is that retirees who are on fixed incomes are going to have to make some hard decisions sometimes in order to live.”

Mr McCrea said rising living costs highlighted the need for compulsory superannuation to continue climbing as scheduled, to 10.5 per cent of wages in July and 12 per cent by 2025.

Retirees will get some respite in September with the next age pension rise, which partly reflects official inflation data.

However, Tribeca Financial chief executive Ryan Watson said it was unlikely to match the “real rates” of price rises at petrol pumps and shops.

“It feels like things are going up a lot more than documented rates of inflation,” he said.

Mr Watson said senior Australians on fixed incomes were “doing it tough”.

“People will cut back and choose to be more conservative,” he said.

“The best thing they can do is understand what they spend and make conscious choices around that.”

This could include buying home-brand groceries and shopping around for better deals from household bill providers – something many seniors disliked doing. “But it’s an opportunity to save hundreds of dollars a year,” Mr Watson said.

PRICE SPIKES HITTING RETIREES

• Petrol up 11%,

• Beef and veal up 7.8%,

• Lamb up 7.6%,

• Poultry up 7.1%

• Toilet paper and paper wipes up 6.7%,

• Fruit and vegetables up 6.6%,

• Coffee and tea up 6.2%,

• Pharmaceutical products up 5.7%,

• Bottled water and soft drinks up 5.6%,

• Household appliances up 4%

Source: ASFA (cost increases for year to March 31)

Originally published as Retirement cost surge: 10 painful price rises as inflation attacks