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Household expenses drive up comfortable retirement cost
The annual expenditure needed to comfortably retire in Australia has seen yet another rise in the September quarter due to the growing cost of everyday items.
According to the Association of Superannuation Funds Australia (ASFA), the comfortable retirement standard grew by 1.3 per cent in the September quarter.
This was higher than both the 0.5 per cent rise in the June quarter and the 1.1 per cent increase recorded in the March quarter.
The figure now sits at another record high of $71,724 per year for couples, while the expenditure needed for singles grew 1.5 per cent to $50,981.
In June, the necessary amount was $70,806 and $50,207, respectively.
Leeanne Turner, ASFA interim chief executive, said retiree budgets have been under sustained pressure for the last two years.
“In the past 12 months alone utility prices have surged more than 12 per cent as the cost of electricity, water, and gas continues to rise,” she remarked.
The ASFA comfortable standard includes the cost of everyday expenses such as health, communication, clothing, and household goods and reflects community expectations as well as changing lifestyle expectations and spending habits.
In the September quarter, electricity costs inflated by 4.2 per cent on average, council rates grew by 4.4 per cent while water and sewerage charges increased by 4.7 per cent.
Growing petrol prices also continued to have a substantial impact, with fuel costs rising by 7.2 per cent. This was the largest quarterly rise since March 2022.
Insurance was another area to see price growth with an increase of 2.8 per cent reported across house, house contents, and motor vehicle insurance.
“However, there was better news in regard to some other categories of expenditure. Annual food inflation eased to 4.8 per cent in the September quarter, down from 7.5 per cent in the June quarter and the peak of 9.2 per cent in December 2022,” the research stated.
Moreover, fruit and vegetable prices fell 6.4 per cent compared to 12 months ago.
Recent projections from ASFA revealed other positive news, with the proportion of Australians being able to afford a comfortable retirement set to rise from 30 per cent currently to 50 per cent by 2050.
“Strong investment returns together with the super guarantee (SG) reaching the legislated rate of 12 per cent in 2025 will help more Australians achieve a comfortable and dignified lifestyle in retirement, but account balance data indicate that many Australians still have a long way to go in achieving that goal,” the report wrote.
Turner expressed her optimistic outlook on the super sector in delivering benefits to members.
“ASFA projections indicate that as it matures, the superannuation system will play a crucial role in improving retirement living standards in Australia,” she said.
AUTHOR
Jasmine Siljic
Jasmine Siljic is a cadet journalist at Money Management and Super Review. Prior to joining MM and SR, she also worked across other Momentum Media brands as an intern. Jasmine previously completed an internship at Mamamia news. She is currently studying a Bachelor of Media and Communications at Macquarie University.
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