Some of Australia’s most vulnerable pensioners have seen their cost of living increase by $1672 in just 12 months, according to the latest YourLifeChoices Retirement Affordability Index.
The analysis, jointly carried out between The Australia Institute and YourLifeChoices, shows that single pensioners who live in rented accommodation have seen their costs increase by 4.2 per cent in the last year, adding an extra $1117 to their costs, while renting couples on the Age Pension have seen their living expenses rise by 3.9 per cent, which is a little over $1600 extra a year.
In contrast, inflation figures from the Australian Bureau of Statistics (ABS) showed a 3.6 per cent rise in living expenses between March 2023 and the same period this year.
The main reason for the large hike in expenses is due to a huge increase in rents, according to Matt Grudnoff, senior economist at The Australia Institute.
“The increasing costs of housing continue to bite, particularly rents which, after a small slow down last quarter, have started to accelerate again,” Mr Grudnoff said
“Rents were up 2.1 per cent for the quarter and 7.8 per cent for the year. The annual increase is the strongest growth in rents for 15 years.”
Groceries are the other big expense eating into the budgets of retired renters, with the rise in cost of fruit and vegetables contributing to the overall rise. Renting couples are now spending an average $186 a week on groceries, up from $179 this time last year, while renting singles are paying $92.27.
“Retirees who rent have smaller incomes, after the cost of housing, and spend a larger proportion of their incomes on essentials like food,” Mr Grundoff said. Rent and groceries account for more than 50 per cent of weekly expenses for renters on the aged pension.
Inflation is outpacing aged pension increases
The latest figures from the YourLifeChoices Retirement Affordability Index – which splits the average weekly costs of six different ‘tribes’ of over 65s based on relationship status, home ownership, and whether or not they rely on a private income or aged pension – show the cost of inflation is outpacing pension increases.
In the most recent rise the Age Pension increased an extra $19.60 a fortnight for singles and $29.40 for couples. But the retirement index shows that for the tribes who rely on the Age Pension costs have outpaced pension increases.
In March 2023, the Constrained Couples tribe – pensioners who own their own home – were spending an average $968.60 a week, but are now spending an average of $1001.53, an increase of $32.93 a week.
Single homeowning pensioners have seen their average weekly expenditure rise from an average $536 to $554.64, an increase of $18.64 a week. ABS data suggests that healthcare costs and increasing insurance premiums are the main financial stresses for Age Pension homeowners.
Renting pensioners are also experiencing inflation outpace pension increases. Couples have seen their weekly expenses rise by an average $32.15 since March 2023, while singles need to spend an additional $21.48 to survive.
More wealthy seniors see lower inflationary rises
The challenges faced by those on the Age Pension stand in contrast to the wealthier over 65s who own their own home and have a private income.
The affluent couples tribe’s total annual expenditure jumped by $2640 in 12 months, but at 3 per cent, this was a good 0.6 per cent lower than inflation.
And the YourLifeChoices Retirement Affordability Index suggests there is room for this tribe to cut back if the cost of living gets a little tight. Figures show 22 per cent of their weekly expenses went towards recreation, which was one area of the Consumer Price Index that saw a fall in costs, with both international and domestic travel costs falling by 2.5 per cent or more.
Meanwhile, Well-Off Singles – homeowners with a private income – saw their cost of living increase by 3.17 per cent, with modest increases across the board.
How has the cost of living affected you? Where have you seen the biggest price increases to your weekly budget? Is the Age Pension enough to live on? Let us know in the comments.
We are now looking for a suitable tent to live in and a park with facilities. Thanks Albo.
We are lucky to own our home, but rates and insurance costs have gone up by over 20%. Food prices have also skyrocketed. I don’t think the quoted inflation rates are correct at all – or certainly not in respect of unavoidable costs. Costs for home repairs or improvements have risen to ridiculous levels thanks to the greed of workers in the building industry, and what is worse than their greed is that workmanship standards have fallen to appalling levels, with tradies having no pride in their work anymore and no ethics.
Cash-strapped non-home owners are the worst off.
Our expenses are going up at the same rate as those working, yet we don’t even get a $20 per fortnight increase! What a joke!
I’ve been saying this for years – the benchmark against the Total Average WEEKLY Male Earnings MUST increase from the paltry percentage of 41.7% to a minimum of 50% (for couples), and the single rate MUST also be increased to 70% of the couples rate, currently 66.33%.
At present I receive approximately 27% of the TAWME PER FORTNIGHT – How this paltry rate has been able to stay so low, is the fault of the law makers, and it MUST BE CHANGED ASAP!
Those who calculate the increases are smoking something.
We own our own home. Increases to healthcare costs, mortgage rates, grocery bills, insurance premiums (up 34% a year for the last 4 years), utility costs (which were way more than the rebate), telecommunications rates, fuel and travel rates, plus massive increases in home maintenance costs have made retirement unsustainable.
At the same time, being able to earn something to top up the pension is an impossibility in these days of ageism.
We never used to think of ourselves as vulnerable, but as pensioners who have worked all our lives and contributed, we’ve seen our basic cost of living increase by over $3,500 in just 12 months. If it wasn’t for savings, we wouldn’t be surviving, but even with savings, the future looks scary.
And then there is the fantasy that a couple somehow live more cost effectively than two single pensioners. More total rubbish by those trying to spin a story about how well they are treating those of us who live on the on the Age Pension.
The ABS may show inflation figures of 3.6 per cent over the prior year, but this averages out for the whole of Australia, and loses relevance when you look at people in different age groups. This is the value of averages!
As we buy cheaper food, our health costs increase. As we stay home more, our utility and communications expenses increase. And because trades people are so hard to get, basic home maintenance costs have gone up by over 300%. All of the costs of owning a home have accelerated significantly.
We eat frugally, but our $150 average spend is now in excess of $275 and that is with dropping a couple of meals a week.
A basic $180 plumbing repair (cost two years ago), recently cost $650 and a faulty circuit breaker replacement has jumped from $150 (a year ago), to $800.
Most retirees are not able to do these small repairs themselves, so are at the mercy of in-demand trades whose costs are passed on in full. No-one offers a pensioner’s discount.
Council rates that were capped 30-years ago, have never been indexed so the 50% rebate doesn’t exist. The cap means the pensioner rebate is less than 20%, especially as most Council Rates have increase over 100% since the rebate was introduced.
While the government may say they have constrained healthcare costs, the lack or access and the increasing out-of-pocket expenses shows this to be another fairy tale.
Thank goodness we had modest savings when we retired, as the Age Pension is certainly not enough to live on. And each year it becomes less able to provide even a basic level of support. Don’t dare to think about what will happen when savings run out! That would just increase health costs.