The price of retirement in Australia has increased substantially. For the past few years, prices have increased by about $13,000 every year. Among the many reasons for this rise, some major ones include inflation, high healthcare costs, expensive energy, and greater overall living costs. The intense magnitude of these shifts has been strong enough to affect current and nearing retirees. Without any question, this makes strategic planning more important than ever.
Why Have Retirement Costs Surged?
The key factors resulting in the $13,000 increase every year include inflation coupled with escalating prices of basic commodities. For retirees, healthcare and insurance have become major expenditures, and likely the highest, given the frequent medical needs and ever-increasing insurance costs. Price hikes are not limited to the mentioned health costs; energy, rent, and food all have increased in price. The current average for a comfortable retirement has gone up, now costing a couple $80,000 a year, and $57,000 for singles, almost $13,000 more than last year. The increase in costs definitely means a decrease in price for many, and many more, tough lifestyle changes, or a complete change to plans set in place.
How Is This Impacting Retirees?
Rising costs annually are overwhelming retirees reliant solely on superannuation or the Age pension. Some are compelled to scale back on spending “holidays, dining out, and all forms of entertainment”. Seniors renting had the most challenges, to the extent that families are helping cover out of pocket costs, to the criticism of younger family members.
Key Expenses Behind the Increase
A breakdown of where the extra money is going highlights the pressure points:
| Expense Category | Avg. Annual Increase |
|---|---|
| Healthcare/Insurance | $4,000 |
| Housing/Rent | $3,000 |
| Energy Bills | $2,500 |
| Groceries | $2,000 |
| Transport/Fuel | $1,500 |
Coping Strategies for Retirees
- Any financial adviser will recommend the following:
- In any spending plans, prioritize superannuation withdrawal, revise to retain more so that savings last longer, and still pay the bills.
- Max out savings to gain government rebates on energy bills and health care.
- Decrease spending to the bare essentials
- Discretionary costs, especially relocation, should be the first means to gain savings.
- Develop relationship with trusted financial planners, or utilize community financial planners. They are free of regional charge, which is especially important for urban centers.
- The pressure is rising, and the expectation is that Age Pension assistance, and cost living assistance be on par with inflation.
- Developing a plan to secure a comfortable retirement.
Because of the rise in prices, the retirement plan is adapting to be more of a continuous process as opposed to something you can “set” and “forget.” Experts believe that the costs of living will become a greater issue with the impact of inflation and the ever-continuing pressure of demand. Keeping to a flexible strategy, adjusting the budget as necessary, and seeking financial guidance will be the most effective means of securing a financial retirement.
Frequently asked question
Q1: Why did the costs of retirement increase by $13,000?
A: The most significant causes are inflation, as well as the costs of living, especially concerning healthcare, housing, energy, and food.
Q2: What is the most significant cost for retirees now?
A: The significant costs now are more associated with healthcare and insurance, however, housing/rent and utilities are also considerable.
Q3: Can that rise be offset with government assistance?
A: Somewhat, with the Age Pension, healthcare subsidies, and energy rebates, however, these might not be enough to offset the increasing costs.
