The latest research from Westpac and the Association of Superannuation Funds of Australia (ASFA) confirms what many already felt — the cost of living comfortably in retirement has gone up.
The cost of living comfortably in retirement increased in the June quarter this year, driven up by transportation, health and clothing costs, which all rose significantly.
The Westpac/ASFA report shows that a couple wishing for a ‘comfortable retirement’ would spend around $50,086 a year, while those seeking a ‘modest’ retirement lifestyle would spend around $27,151 per year.
The Westpac/ASFA report defines a ‘modest’ lifestyle in retirement as “better than the age pension, but still only able to afford fairly basic activities”.
A ‘comfortable retirement’ allows retirees to be involved in a broad range of leisure activities and have purchasing power.
“For those with a comfortable lifestyle in retirement, costs rose by 1.2 per cent from the March quarter 2008 and by 3.5 per cent from the June quarter a year earlier,” the report states.
Food, health, transportation and recreation form a large part of retiree budgets.
Between the March and June quarters 2008, retirees faced a 2.4 per cent increase in the cost of health services and a 3.1 per cent increase in transportation costs, “largely due to the 8.7 per cent increase in petrol prices”, the report said.
There was, however, a 0.1 per cent decrease in the cost of food and a 0.2 per cent reduction in the cost of recreational goods and services. This may be due to the fact that the cost of domestic holidays falls in winter months.
But while food costs were slightly down over the previous quarter, over the year to the June quarter 2008 food costs were up 3.9 per cent.
“As well, alcohol and tobacco prices were up 4.8 per cent, health costs rose 4.8 per cent and transportation costs were up 6.9 per cent,” the report found.
Over the year, the average price of unleaded petrol increased from around $1.25 per litre to around $1.60 per litre. “Over the last four years the costs of a comfortable retirement have increased in total by 11.9 per cent and for a modest standard of living in retirement by a total of 13.1 per cent. Basic budget items tended to have the largest cost increases.”
The figures assume that the retiree/s own their own home.
