Over the past couple of weeks, YourLifeChoices has tackled the subject of retirement readiness in several articles. Preparing for retirement is certainly important, but for those already in that phase of life, the focus is quite different. And one of the focal points is prices.
Whatever preparations retirees made beforehand, for many the issue now is managing retirement, and sometimes simply managing to get by in retirement. And, according to the latest research from the Association of Superannuation Funds of Australia (ASFA), that’s not easy right now.
The ASFA’s latest survey has found that retirees continue to face significant cost pressures on their household budgets. High insurance, electricity and food prices are the chief contributing factors, retirees say.
In the December 2023 quarter, the ASFA Retirement Standard rose to an all-time high of $72,148 per year for couples, and $51,278 for singles. That represents an annual increase of roughly 3.5 per cent.
This comes in at below the CPI increase of 4.1 per cent. While that sounds positive, the ASFA retiree budgets exclude some items that contributed to the overall CPI figure.
According to ASFA CEO Mary Delahunty, it is the increasing cost of basic needs that’s putting pressure on retirees. “Retiree budgets have been under substantial pressure for the past two years,” she said, “due to the high cost of essential goods and services.”
Silver linings
However, Ms Delahunty did suggest there were signs of relief on the horizon. “Fortunately, we are seeing price increases in the key categories that make up retiree budgets begin to ease.” These include home and content insurance, along with fruit and vegetables, fuel and electricity.
Breaking down the increases by category, insurance was very much the elephant in the room. In the 12 months to the end of December 2023, insurance prices jumped by a massive 16.2 per cent. A rise of that magnitude has not been recorded since 2001.
Other notable rises included a 1.2 per cent increase in the cost of medical services over the December quarter and 3.9 per cent increase in the cost of domestic holiday travel and accommodation over the summer months.
The relief flagged by Ms Delahunty was apparent in electricity prices, which recorded a 1.4 per cent December quarter increase. While still a concern, it was well below the 4.2 rise measured in the September quarter.
Food was another area in which there were signs of welcome relief. The annual food inflation index peaked at an alarming 9.2 per cent in December 2022. By the September 2023 quarter, that figure had eased to 4.8 per cent. It fell further in the December 2023 quarter, coming in at a 12-month increase of 4.5 per cent.
In even better news, fruit and vegetable prices fell by 0.2 per cent in the year to December.
Where are prices headed now?
While relief appears to be at hand, retirees will be hoping it is sustainable relief. The release of the ASFA Retirement Standard should provide a clearer understanding of the direction prices are headed.
As a retiree, have you felt the strain of increasing prices over the past couple of years? Have you spotted any signs of relief? Let us know via the comments section below.
Also read: Why supermarket prices don’t come down with interest rates
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