The staggering number of savings needed to retire has been revealed, with the cost of retirement rising by almost 4 per cent over the past year.
These pressures have resulted in further financial strain on retirees, the Association of Superannuation Funds of Australia (ASFA) said.
Retirees are having to compensate with rising costs for essential goods and services, ASFA said.
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This has seen the cost of funding a comfortable retirement increase by 3.7 per cent over the last 12 months.
Costs for home, vehicle and private health insurance have seen a notable rise and placed further pressure on retirees, ASFA said.
Budgets for both singles and couples have risen by 0.9 per cent in the last quarter, with single retirees and couples aged about 65 now requiring $52,085 per year and $73,337 per year respectively to enjoy a comfortable retirement.
Single retirees and couples aged about 85 now need $48,879 per year and $67,647 per year respectively to enjoy a comfortable retirement.
“Retirees are managing an increasingly difficult landscape where the costs of essential goods and services keep rising,” ASFA CEO Mary Delahunty said.
“Health, home, and transport are vital to their wellbeing, yet the expenses tied to these necessities are steadily increasing.”
Delahunty emphasised the importance of both compulsory superannuation and voluntary contributions, which provide retirees with the financial security they need to enjoy their later years.
“For Australians to have the retirement they deserve, it’s crucial that they have access to adequate superannuation savings,” she said.
The largest price rises
Insurance costs:
Insurance premiums have increased sharply, rising by 3.1 per cent in the last quarter and 14 per cent over the past year.
“This surge is largely due to higher reinsurance costs, the impact of natural disasters, and increased claims,” ASFA said.
Private health insurance:
Private health insurance premiums increased by an average of 3.03 per cent from April 1, the largest rise since the pandemic began.
“This has added to the financial burden on retirees, particularly those on fixed incomes,” ASFA said.
Electricity prices:
Electricity costs rose by 2.1 per cent in the last quarter and 6 per cent over the past year.
“The Energy Bill Relief Fund provided some relief, but without these rebates, electricity prices would have increased by 14.6 per cent over the 12 months to June 2024,” ASFA said.
Food costs:
“While annual food inflation eased slightly to 3.3 per cent in the last quarter, down from 3.8 per cent in March, retirees still face rising costs for essentials like fruits and vegetables, which are 3.7 per cent higher than a year ago,” ASFA said.
Clothing and footwear:
“Prices for clothing and footwear rose by 3.1 per cent during the quarter, driven by the introduction of new season stock and the end of sales promotions,” ASFA said.
Fuel prices:
Automotive fuel prices increased by 1.7 per cent in the last quarter.
This adds to “the ongoing volatility in fuel costs that retirees must manage”, ASFA said.
Travel and accommodation:
While domestic travel costs remained stable, international travel and accommodation expenses increased by 8.1 per cent.