Retirees face rising costs as modest budgets climb almost 6pc and renters pay thousands more than homeowners

The cost of a modest retirement is outpacing inflation, rising by almost 6 per cent in a year as power, health, insurance and housing bills take more from older Australians’ budgets.

The Association of Superannuation Funds of Australia says a homeowner couple aged 65 to 84 now needs $78,998 a year for a comfortable retirement, up about $3700 in 12 months. A single needs $56,166, nearly $2900 more.

“Retirees are among the groups hit hardest by the cost-of-living crisis because their budgets are weighted towards the things going up in price the most,” association chief executive Mary Delahunty said.

A more modest lifestyle now costs $52,690 a year for a homeowner couple and $36,548 for a single, up about 5.4 per cent and 5.9 per cent respectively. Headline inflation was 3.8 per cent.

For retirees still paying rent, ASFA puts the annual cost of a modest lifestyle at $69,376 for a couple and $51,418 for a single, even after rent assistance is taken into account.

That leaves a single renter needing just $4748 less each year to live modestly than a single homeowner needs to meet ASFA’s comfortable standard.

The figures are ASFA benchmarks, not a measure of what every retiree actually spends. Its comfortable standard includes private health insurance, regular meals out, a reliable car and domestic and overseas holidays.

“At the comfortable level, a couple can afford top-level private health insurance, eat out most weeks, take a domestic holiday each year and an overseas trip every few years,” Ms Delahunty said.

Electricity prices were 22.4 per cent higher in the year to June as government rebates rolled off, while vehicle maintenance rose 6.5 per cent, medical and hospital services 5 per cent and insurance 4.9 per cent.

For a comfortable couple, higher transport and power costs alone added about $1700 to the annual budget.

The June-quarter figures also predate another rise in petrol prices. Fuel was 7.3 per cent cheaper than a year earlier in June, but prices have since rebounded as excise relief ended and the Middle East conflict drove international fuel prices higher.

Homeowners aged over 85 faced larger increases again. ASFA estimates a comfortable retirement now costs $74,484 for a couple and $53,964 for a single, both more than 6 per cent higher than a year ago.

Australian Bureau of Statistics figures show living costs for age pensioner households rose 4.7 per cent over the year, while costs for self-funded retirees rose 3.8 per cent, in line with inflation.

The full Age Pension currently provides about $47,000 a year for a couple and a little more than $31,000 for a single, before the next indexation increase takes effect on September 20.

“The Age Pension is a social welfare net that guarantees no older Australian has to live in poverty,” Ms Delahunty said.

“It was never designed to fund the kind of lifestyle in retirement that most Australians aspire to.”