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Where is your money going?
Age pensioners and self-funded retirees alike are being hit with a higher cost of living, but what’s driving it?
Where is your money going?
Age pensioners and self-funded retirees alike are being hit with a higher cost of living, but what’s driving it?
The selected living cost index for age pensioners grew by 2.2 per cent between the June quarter in 2017 and the June quarter this year, according to the latest figures from the Australian Bureau of Statistics (ABS). Self-funded retirees’ selected living costs index also grew by 2.1 per cent, reflecting an increase in the last quarter of 0.4 per cent.
These indices measure the amount by which after-tax incomes would have to change to allow households to buy the same quantity of goods and services that they bought in the base period.
Self-funded retirees
For self-funded retirees, rising health costs was the main driver behind the 0.4 per cent June quarter increase. Health costs were up 2.0 per cent over the June quarter 2018 thanks to an annual increase in private health insurance (PHI) premiums and a decrease in the PHI rebate.
Rising transport costs, up 1.5 per cent, also didn’t help. These were triggered by high world oil prices.
However, cheaper food and non-alcoholic drinks helped offset the increase to some extent, with a greater supply of seasonal varieties easing the pain.
Pensioners and beneficiaries
This group saw their living cost index grow 0.3 per cent over the June quarter. An increased cost in transport (2.4 per cent) was their main financial burden, although an increase in alcohol and tobacco prices also contributed (1.9 per cent).
Tobacco became more expensive after the federal excise tax increase on 1 March 2018.
Like their self-funded counterparts, cheaper food and drinks, down 0.7 per cent, helped take a bit of the pressure off.
Age pensioners
Their living expenses increased 0.2 per cent in the June quarter, with transport (2.2 per cent) and health (1.0 per cent) the main culprits.
Again, cheaper food and drinks were a saving grace.
Across all groups, housing costs decreased along with recreation and culture between the March and June 2018 quarters.
However, insurance costs increased, up 0.7 per cent for self-funded retirees and age pensioners and up 0.6 per cent for pensioners and beneficiaries.
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