Retirement
Drought leaves retirees feeling the heat
The drought is being blamed for a recent and substantial increase to the daily costs of living of retirees.
Drought leaves retirees feeling the heat
The drought is being blamed for a recent and substantial increase to the daily costs of living of retirees.
The Association of Superannuation Funds of Australia (ASFA) has shown that over the year to the September quarter 2019, costs were up around 1.5 per cent for couples at both the comfortable and modest levels.
Over the same period, there’s been a 1.7 per cent increase to the consumer price index (CPI).
This equates to couples needing to spend $943 more a year to reside at the “comfortable” level, while for singles this is $587 more.
It means the new figures for a comfortable retirement sit at $61,786 per year for couples and $43,787 for singles.
ASFA’s CEO, Dr Martin Fahy, said while increases may not look large, “the drought is starting to [have an] impact on the prices paid by retirees”.
The impact of drought on grocery costs
The price of beef is up by 7.1 per cent while lamb prices are now up by 14.3 per cent.
Breakfast cereal prices have increased by 6.4 per cent while the price of poultry has pushed up by 5.3 per cent.
The prices of eggs (4.5 per cent), bread (3.6 per cent) and cheese (3.4 per cent) have also seen increases attributable to drought conditions.
The impact of a lower Australian dollar exchange rate
The decline in the Australian exchange rate has also driven increases to motor vehicle costs and international travel, Dr Fahy noted.
The price of international holiday travel and accommodation has risen by 5.8 per cent over the last 12 months.
Over the same period, the price of motor vehicles has increased by 3.2 per cent.
The notable costs of living increases have led Dr Fahy to deliver a warning that retirees need to take into account the potential for future price increases, especially now that many Australians are expected to spend upwards of 25 years in the retirement phase of life.
“With the low rate of overall inflation, the Age Pension is only increasing at a modest rate, with the maximum Age Pension increasing by 1.9 per cent over the last 12 months to September to reach $24,335 a year for a single person (including allowances),” he indicated.
“The Age Pension is less than what is needed to support even a modest standard of living in retirement.”
Dr Fahy commented that “having sufficient savings in superannuation to support the lifestyle Australians want and deserve in retirement is an imperative”.
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