Cost of living: how worried seniors can cope with surging expenses

Their nest eggs are growing slower than inflation, and sometimes going backwards, but there are ways older Australians can deal with higher living costs.

Older Australians struggling with surging living costs are worried about their ability to bounce back from a recession, and many don’t have a Plan B.

A new report commissioned by Australian Seniors found nine out of 10 over-50s expect the cost of living to continue climbing, many are missing out on things they want, and 39 per cent describe their current living standard as modest at best.

Almost three-quarters of over-50s are concerned about recovering from a downturn when they have minimal time to recoup losses, and 36 per cent feel they do not have a back-up plan, the Australian Seniors Super Savvy Report says.

Dawn Thomas from The Wealth Designers says retirement projections can help. Picture: Supplied

A bigger superannuation balance is a key plank for financial resilience, and The Wealth Designers senior financial adviser Dawn Thomas says people approaching retirement should not shy away from super because they feel the rules are always changing.

“Use retirement projections,” she says. “Whether you use the tools on your superannuation provider’s website or on Money Smart, look at whether you are on your path to reaching your retirement goals.

“If you are not sure how much retirement may cost, refer to sites like ASFA’s retirement standard to get a sense … then play around with the impact of increasing your super contributions, to see how that impacts your retirement.”

Association of Independent Retirees president Wayne Strandquist says seniors have been concerned about food, fuel and energy costs and are focusing on cutting their discretionary spending.

“They’re eating at home more and having the family around rather than going out to a restaurant,” he says.

Unlike pensioners who receive CPI-linked payment increases every six months, self-funded retirees have a finite nest egg being eaten by inflation. “Unfortunately there is no one giving CPI rises to their superannuation drawdowns,” Strandquist says.

The age pension remains a safety net, but many retirees “attach a lot of importance to being self-reliant and looking after themselves”, he says.

Association of Independent Retirees president Wayne Strandquist. Picture: Jonathan Ng

Thomas says seniors were used to lower expenses during the pandemic and today face a big jump in lifestyle costs.

“Now that the world has opened up, their pre-Covid plans are back on the agenda, however this time, everything is more expensive,” she says.

Thomas’s top tips for Australians aged over 50 include:

• Improve your financial literacy using free videos, articles, books and podcasts.

• Read your super statement and investigate ways to increase your balance.

• Understand what you want for the next 30 or 40 years.

• Seek professional help from a financial adviser if you are unsure.

Originally published as Cost of living: how worried seniors can cope with surging expenses