New research by National Seniors Australia and Challenger reveals most older people are increasingly concerned about the rising costs of living, with four in five reporting it had negatively impacted their lifestyle and wellbeing.
The report The Cost of Living and Older Australians’ Financial Wellbeing, based on the 2023 National Seniors Social Survey of almost 6,000 people aged 50 and over, unpacks how cost-of-living pressures are affecting the financial security of older Australians.
Over half the survey respondents (53%) said they thought they would outlive their savings, and 85% of them were worried about that.
Those concerned about long-term cost-of-living struggles were five times more likely to be concerned about this scenario.
National Seniors Australia Chief Operating Officer, Chris Grice, said older people are typically thought to be protected from the more severe impacts of increasing living costs because of their relatively high rates of home ownership, but that is simply not the case.
“The survey findings show that people aged 50-plus are very diverse in terms of the impact of the increasing cost of living on their financial wellbeing,” Mr Grice said.
“Older people experience less overt challenges to their financial wellbeing that undermine financial security and overall quality of life and these effects vary depending on age, gender, partner status, health, wealth, home ownership, and sources of income.
“The results are clear, recent increases in the cost of living in Australia have impacted older people’s financial wellbeing across all three of its components: meeting expenses, being in control of finances, and feeling financially secure.”
Eighty-three per cent of survey respondents believed they would continue to feel cost-of-living impacts on their lifestyle over the 12-month period following the February survey.
People with less savings, people who don’t own their home, younger age groups, those in poor health, and women were the groups most likely to hold long-term concerns about the rising cost of living.
Being able to afford essentials was the highest cause for concern, with respondents listing health, energy, and grocery expenses as the top three pain points.
For most, managing their financial situation meant cutting back. Almost two-thirds of respondents (62%) chose this as an option they could use to adjust to increasing cost-of-living pressures.
Challenger Head of Retirement Income Research, Aaron Minney, said cutting spending is not a sustainable long-term strategy for older Australians to manage rising costs of living, with the impacts of this issue set to be long-lasting.
“An important factor for retirement wellbeing is having the financial capacity to maintain living standards that were enjoyed before retirement,” Mr Minney said.
“In general, older people’s sense of financial resilience and financial security have fallen since the start of the pandemic and the increasing cost of living has further undermined long-term planning and financial goal setting of older Australians.
“Certainty of income is vital to give retirees the confidence to spend and peace of mind that they have the financial security to protect their lifestyle, health, and wellbeing throughout their golden years."
To manage the concern about outliving savings, 83 percent of those surveyed reported they want money that lasts a lifetime, and income that increases with inflation is also a top financial priority for most. Regular income for essentials (91%) and being able to afford care and medical costs (86%) were also crucial to long-term confidence.
“Financial wellbeing is critical to quality of life in older age, and rapidly increasing living costs are undermining the financial wellbeing of older people,” Mr Minney said.
“Finding ways to mitigate worry and giving greater confidence that they will always have the income to meet these essential expenses will improve people’s wellbeing and quality of later life. A guaranteed and adequate income stream provides a lot of reassurance and comfort to older Australians battling rising costs.
“After nearly 30 years of relative stability in the cost of living, retirement planning and financial advice must better address the potential effects of inflation in undermining people’s control over their finances.”
To read the full report, click here.