The cost of living for retirees has increased slightly in the June quarter, the Association of Superannuation Funds of Australia (ASFA)’s “Retirement Standard” for June has found. Released on August 16, the quarterly standard benchmarks the annual budget needed by Australian individuals and couples to fund either a comfortable* or modest** standard of living in their post-work years. The updated figures reflect inflation and provide detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.

In contrast to the last survey, where the cost of a comfortable retirement dropped, the latest Retirement Standard showed that:

• a couple now needs $56,406 a year to fund a comfortable retirement lifestyle (a 0.2% increase from the March quarter)
• a couple seeking a modest retirement lifestyle needs $32,656 a year (a 0.1% increase)
• a single person looking to fund a comfortable retirement will now need $41,197 a year (a 0.1% increase), and
• a single person looking to fund a modest retirement lifestyle will need $22,654 (a 0.1% increase).

Though the increases in costs were largely negligible, ASFA chief executive Pauline Vamos said it is important that policy makers are aware of the different items and how they affect retirees’ cost of living.

“Rising health costs can be a concern for retirees as they often form a large part of their budgets. Similarly, increases in the cost of food, energy and transportation also have a significant impact.

“It’s important policy makers take this into account when considering how to address cost-of-living issues for this group,” Vamos said.

When it came to item-by-item cost changes, cheaper domestic holiday travel and accommodation (-4.0%) and a decrease in petrol prices (-3.1%) offset significant price increases in medical and hospital services (+3.4%) and furniture (+4.8%).

The Retirement Standard said the main contributor to the rise in medical and hospital service costs were the increases in private health fund premiums, effectively from April 1, 2013. Similarly, a rise in vegetable prices (+3.3%) due to unfavourable growing conditions led to a very modest increase of 0.1% for food prices – largely offset by a fall in fruit prices (-3.4%).

The table below shows the budgets for various households and living standards, as of the June quarter of 2013:

The figures in each case assume that the retiree(s) own their own home and 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. All calculations are weekly, unless otherwise stated.

*Modest lifestyle in retirement: Better than the Age Pension, but still only able to afford fairly basic activities.

**Comfortable retirement lifestyle: Enables 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. Extra costs in a comfortable budget may include:
a) some wine
b) eating out from time to time
c) being able to entertain friends and family at home
d) private health insurance at the top rate
e) buying magazines and CDs
f)  domestic and occasionally international holiday travel
g) being able to afford additional alcohol, tobacco or gifts
h) a reasonable car
i)  good clothes, and
j)  a range of electronic equipment.