Each quarter the Australian Self-Funded Retirees Association (AFSA) updates its Retirement Standard. A guide for retirees on how much they need to fund a comfortable or modest standard of living.   

The June quarter figures indicate that couples aged 65 spend $66,725 and singles $47,383 per year.  

This is up by 2.0 per cent and 1.9 per cent respectively on the previous quarter. The growth is due to price increases of around 6.2 per cent for the comfortable couple budget and 6.7 per cent for the comfortable single budget.   

It’s no surprise the AFSA has faced significant price increases for non-discretionary items such as food, automotive fuel, and health costs.   

“Retiree households continue to face ever-increasing health costs. The annual increase in private health insurance applied from 1 April,” said ASFA Deputy CEO Glen McCrea.   

Some insurance premiums rose 3 per cent (the average of 2.7 per cent). Out-of-pocket expenses grew for dental treatments, optical expenses, and some hospital procedures.  

Some insurers have postponed premium increases until later in the year.  

ASFA calculates that a “comfortable” retirement can be achieved through a mix of assets and pension payments. Therefore, a couple needs $640,000 and a single $545,000 in superannuation.   

However, these numbers were questioned by Super Consumers Australia last month, outlining that a “medium” spending couple required $402,200 and a single $301,000. 

The ASFA estimates retirement budgets for those aged 85 were up by around 0.8 per cent from the previous quarter. The older retiree budgets were not directly affected by the increase in petrol prices as there is no allowance for car ownership for this age group. The over 85 budgets also do not include any overseas travel.

ASFA also examined data from the Department of Social Services and the Australian Bureau of Statistics and found that 40 per cent of new retirees receive an age pension. This is down from 60 per cent a decade ago and 80 per cent when compulsory super started in the early 1990s.  

It’s believed this is due to superannuation doing more of the heavy lifting in delivering income to retirees and flattening the pension bill to the government. 

• All price changes from the previous quarter except if referred to as annual: 
• Fruit and vegetables rose 5.8 per cent due to heavy rainfall and flooding in key production areas. COVID-19 –related supply chain disruptions and high transport and fertiliser costs.  
• Meals out and take away foods rose 1.4 per cent due to rising input costs and ongoing supply and labour shortages.  
• Bread and cereal products rose 3.1 per cent due to constrained global wheat supply.  
• Over the past twelve months, the group rose 5.9 per cent. Meals out and take away foods (+4.7 per cent), Fruit and vegetables (+7.3 per cent), and non–alcoholic beverages (+7.9 per cent) were the main contributors.  
• Automotive fuel rose 4.2 per cent due to the oil price shock caused by the Russian invasion of Ukraine, paired with the ongoing easing of COVID-19 restrictions strengthening global demand.  
• The price of motor vehicles rose 1.2 per cent due to supply constraints restricting global supply chains and strong domestic demand.  
• Furniture rose 7.0 per cent due to increased transport and manufacturing costs. Household appliances, utensils and tools rose 4 per cent due to high freight costs.  
• Non–durable household products rose 2.3 per cent driven by rises. Products affected include tissues, toilet paper and paper towels, reflecting strong demand and increased freight and inputs costs.  
• Garments rose 4.4 per cent due to the pass-through of high freight costs for new season stock.  
• Private health insurance premiums rose on average by 2.7 per cent from 1 April. Insurers have increased premiums by more than 3 per cent. However, some insurers have postponed premium increases until later in the year.  
• Domestic holiday travel and accommodation rose 1.7 per cent due to strong demand.  
• International holiday travel and accommodation rose 19.9 per cent due to price rises in tours and airfares. Tours of America and Europe resumed for the first time since 2019, whilst demand for flights to Europe exceeds current capacity. Airfares are now above pre–COVID-19 levels due to low capacity and rising jet fuel prices.   

Largest annual price increases:   

• Automotive fuel 32.1 per cent.

• Oils and fats 14.0 per cent, coffee and tea 9.3 per cent, breakfast cereals 8.8 per cent, bread 7.2 per cent, soft drinks 7.6 per cent.
• Vegetables 14.6 per cent, beef 9.4 per cent, lamb 7.1 per cent, milk 5.3 per cent. 
• Furniture 8.5 per cent, floor coverings 6.9 per cent, home maintenance 5.9 per cent, cleaning products 8.0 per cent.
• Domestic travel and accommodation 7.8 per cent.

Since 2004 the ASFA Retirement Standard has served as a retirement companion for Australians, providing a reliable retirement savings guide by benchmarking the annual budget needed to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, reviewed regularly to reflect lifestyle changes, and provides detailed budgets of what single people and couples would need to spend to support their chosen lifestyle.  

For further reading: Superannuation.asn.au and The Australian.