How retirees can deal with the rising cost of living this Christmas

The latest data released this week from the Association of Superannuation Funds of Australia (ASFA) paints a concerning picture for retirees.

The cost of living for a comfortable retirement has surged by 1.3 per cent for the quarter for couples, and as much as 1.5 per cent for single people as fuel, electricity and insurance costs continue to rise.

Costs, especially for single retirees, have risen sharply recently.Credit: Dominic Lorrimer

Inflation of electricity and utilities is hitting single people at a higher rate as they grapple with the escalating costs of electricity and utilities on a sole income.

According to the ASFA report released this week, the amount Australians need to have a comfortable retirement has increased to an unprecedented $71,724 for couples in the September quarter, up 1.3 per cent.

For singles, the rise is slightly steeper at 1.5 per cent, totalling $50,981. This results in a 12-month rolling inflation rate for retirees at 5.5 per cent, just above Australia’s Consumer Price Index (CPI) standing at 5.4 per cent.

The burden on single retirees is more pronounced in this quarter because of the hikes in energy and utility costs, which have soared by 12 per cent in the past year. Fuel prices have increased by 7.2 per cent in the September quarter, acting as a significant catalyst for inflationary pressures.

If you’re struggling, take another look at the simple ways you can find a few extra bucks. It might make it a little easier this Christmas.

Insurance costs continue to outpace other living expenses, surging by 2.8 per cent, while telecommunication charges have risen by 1.9 per cent, and postal services have experienced a substantial 8.2 per cent hike, attributed to elevated fuel costs being passed on to consumers.

The escalation in electricity prices is a huge driver of cost-of-living inflation, with most retired people seeing a 4.2 per cent increase in the September quarter. For those ineligible for government rebates aimed at pensioners and seniors concession cardholders, the impact is even more pronounced.

Over the year, electricity costs have surged by a staggering 18.6 per cent, excluding any rebates. That’s a significant burden on people who are already navigating a challenging economic landscape.

There’s some good news in the quarterly data, though. Some of the basic costs of living which have been rising quickly in previous quarters have seen their inflation slow right down. The cost of food was only up 0.6 per cent, the cost of clothing was only up 0.4 per cent and the cost of healthcare was only up 0.1 per cent.

For those who are feeling the pinch, especially as we approach Christmas, it is a good time to take another look at your entitlements and benefits, to try to eke out a few extra dollars to help with the cost of living:

1. Make sure you are getting your energy relief payments. Government energy rebates are being paid in all Australian states and territories of Australia for pensioners and families receiving family tax benefits part A and B. In some states you may be eligible with a Commonwealth Seniors Health Card. It’s worthwhile taking a look.

Despite the eligibility of thousands for these concessions, only a small portion of individuals appear to be aware. Qualifying customers in NSW, Victoria, Queensland, South Australia and Tasmania are set to receive up to $500 towards electricity or gas bills. Households in Western Australia, the Northern Territory, and the ACT, however, will only be eligible for rebates of up to $350.

These payments should have been made directly to your electricity account if you are already registered as eligible with your provider. If you live in an embedded network (that is, you get your electricity from your landlord, which might be a retirement village, caravan park, or apartment) and your household is eligible for the energy supplement payments, you will need to apply for your energy rebate on the appropriate state government website.

If your application is approved, you will then receive the additional $500 or up to $350 subsidy.

2. Review and update your asset values with Centrelink to maximise your pension benefits. If you are receiving a pension it might be work taking another look at your Centrelink asset values.

You might well find that your car, boat or caravan or other assets have depreciated since the last time you reviewed them and that if you reduce the values to current market levels, that allows you to access more age pension benefits.

“Centrelink don’t automatically reduce the value of these assets over time, so depending on your other assets and income, if they are now worth less than what you last told them, you may be leaving money on the table,” said Craig Day, Head of CFS FirstTech.

3. And if you are retired, evaluate whether it’s time to transfer your super to a tax-free pension. Many people in retirement have not yet switched their super over into retirement phase where your income is tax free, something I have lamented at length.

This is a simple way to see more money in your pocket, as this little example shows: “If you had $500,000 in a super account and got a return of 4 per cent or $20,000, tax of up to $3000 would apply. However, if you converted your super to a pension, the full $20,000 would be completely tax-free, leaving you with more to fund your retirement,” Day says.

Every dollar really does count for those in their retirement years, so if you’re struggling, my message to you is to take another look at the simple ways you can find a few extra bucks. It might just make it a little easier this Christmas.

Bec Wilson is the author of the bestselling book How to Have an Epic Retirement and host of the new podcast Prime Time with Bec Wilson. She writes a weekly newsletter at epicretirement.net.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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