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20 December 2007

Retirement living costs up in September: Report

The cost of living has continued to rise for singles and couples in retirement according to the latest figures from the Westpac ASFA Retirement Standard research report.

During the September quarter 2007, the living expenses for retired couples rose by 0.6 per cent. For couples on a 'comfortable' retirement lifestyle, the cost of living increased to $48,648 per annum. In comparison, couples with 'modest' living requirements require a yearly budget of $26,339.

Retirees fare slightly better than most
Lower spending by retirees on financial and insurance services, which both experienced sharp price increases during the September quarter, were the main factors contributing to retirees faring slightly better than the price increase in the 'All Groups' index, which rose by 0.7 per cent.

Food for thought
The drought continued to play a major part in driving up the cost of living for retirees through higher food costs. During the quarter, food prices rose by a total of 1.9 per cent.

The cost of seasonal produce such as fruit and vegetables grew significantly, recording increases of 9.6 per cent and 7.9 per cent respectively.

Those wanting to drown their sorrows in response to higher food costs would do well to determine their palettes. Beer prices were up 0.7 per cent. In contrast, wine drinkers will have cause for cheer, with prices falling by 0.4 per cent.

Utilities, leisure and health
The cost of other essential items increased markedly. Utility prices rose across the board with electricity costs increasing by 4.3 per cent, while water and sewerage charges grew by 5.5 per cent.

The cost of leisure also went up. For retirees going abroad, the cost of overseas travel rose by 4.2 per cent. In contrast, domestic holidays and accommodation costs increased by a more modest 1.8 per cent.

Amidst escalating costs, health care brought a silver lining. These costs fell by 0.5 per cent, resulting largely from a decrease in the net cost of pharmaceuticals.
For motorists, petrol prices fell by 3.7 per cent during the quarter, however other motoring charges rose.

More information:
Costs and summary figures for capital cities and certain major regions can be accessed via the Retirement Standard calculator on the Westpac website.

About the Westpac ASFA Retirement Standard
The Westpac ASFA Retirement Standard benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.

• Modest lifestyle in retirement: Better than the Age Pension, but still only able to afford fairly basic activities.
• Comfortable retirement lifestyle: Enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as household goods; private health insurance; a reasonable car; good clothes; a range of electronic equipment; and domestic and occasionally international holiday travel.

Table 1: National budgets for various households and living standards

	Modest lifestyle - single	Modest lifestyle - couple	Comfortable lifestyle - single	Comfortable lifestyle - couple
Housing - ongoing only	$65.07	$67.30	$86.45	$88.67
Energy	$11.95	$14.24	$13.08	$15.37
Food	$64.76	$138.40	$130.44	$183.89
Clothing	$14.62	$25.21	$30.86	$56.28
Household goods and services	$48.58	$51.45	$86.34	$91.34
Health	$12.03	$22.68	$50.68	$99.66
Transport	$71.78	$72.58	$109.55	$110.34
Leisure	$44.40	$73.51	$142.04	$203.93
Personal care	$25.23	$39.77	$25.23	$39.77
Gifts and/or alcohol and tobacco	n/a	n/a	$21.86	$43.72
Total per week	$359.44	$505.12	$696.52	$932.98
Total per year	$18,742	$26,339	$36,319	$48,648

Note: The figures in each case assume that the retiree(s) own their own home. The figures relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement. Single calculations are based on female figures.