The cost of living for retirees has continued to climb at a rapid pace, with the cost of funding a comfortable retirement increasing by 7.5 per cent in the 2022, according to the Association of Superannuation Funds of Australia (ASFA).
Releasing its Retirement Standard figures for the December quarter 2022, ASFA stated the cost of a comfortable retirement for a couple was now $69,691 a year and $49,462 for a single person, having risen 2.5 per cent in the fourth quarter of last year, mainly off the back of increases in the price of food, fuel, travel and electricity.
The increase over the quarter was the fourth consecutive rise, with the superannuation industry peak body noting that over the five quarters from September 2021 to December 2022, the consumer price index (CPI) had increased by an average of 1.8 per cent per quarter, compared with the historical average of 0.6 per cent per quarter.
The association noted the percentage increases in the budgets for those aged around 65 were higher than the quarterly increase in the December quarter all groups CPI of 1.9 per cent, but slightly lower than the annual change of 7.8 per cent.
ASFA chief executive Martin Fahy said the increase in prices has not been offset by a rise in the pension.
“For retiree households, falling real wages have meant that the age pension payments have not benefitted from adjustments linked to wage increases,” Fahy explained.
He added the increase in retiree budgets has also led to a lift in superannuation lump sums ASFA estimates will be needed at age 67 to fund either a modest or comfortable retirement until the age of 92.
According to the body, the lump sum now needed for a comfortable single retirement increased by about 9 per cent from $545,000 to $595,000 and about 7.8 per cent for a comfortable couple retirement from $640,000 to $690,000.
It added these figures reflect that recent increases in prices have outstripped wages growth, requiring an adjustment in the estimated lump sum needed, however, the current superannuation guarantee settings should protect most people.
“While recent price increases have particularly impacted on the currently retired, the legislated 12 per cent superannuation guarantee will support the majority of Australians building adequate superannuation savings across their working lives to face future retirement costs with confidence,” Fahy predicted.
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