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Cost of retirement at a record high
The cost of living for retirees is rising at a faster rate than general inflation, with an annual increase in the yearly expenditure needed to reach ASFA’s comfortable retirement standard of 7.7% in the March quarter – compared to a 7% increase in the overall CPI.
Couples now need a record $70,482 a year to afford a comfortable retirement, while singles need $50,004.
“Retiree budgets have been under substantial pressure for over 18 months due to the higher cost of essential goods and services, namely food, fuel and electricity, with the latter up 15% over the year,” Association of Superannuation Funds of Australia (ASFA) chief executive officer Dr Martin Fahy said.
Fahy also pointed out that self-funded retirees will not be eligible for Federal Budget measures aimed at relieving cost-of-living pressures.
During the March quarter, medical and hospital services costs rose 4.2% over the quarter, the price of pharmaceutical products rose by 4.5% and insurance costs were up a further 3.5%.
Fortunately, some retirees may benefit from higher interest rates on income from their term deposits and savings.
“We are seeing a turnaround in term deposit income and, critically, the 1 July increase in the Super Guarantee (SG) rate to 11% will put a greater number of Australians on track to achieve the dignified retirements they deserve,” Fahy said.
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