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Inflation drives the cost of retirement to a record high

Self-funded retirees are the hardest hit by the increasing rise in inflation and cost-of-living according to the latest research from Association of Super Funds Australia.

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The annual expenditure needed to reach the ASFA comfortable retirement standard rose another 1.1 per cent in the March quarter to hit a record high of $70,482 per year for couples, and $50,004 for singles, taking the annual increase to 7.7 per cent.

"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 per cent over the past year," said ASFA CEO, Dr Martin Fahy.

"Self-funded retirees will not be eligible for Federal Budget measures aimed at relieving cost-of-living pressures, and despite recent adjustments to the Age Pension, payments continue to lag inflation."

During the March quarter, medical and hospital services costs rose 4.2 per cent, the price of pharmaceutical products rose by 4.5 per cent and insurance costs were up a further 3.5 per cent.

The ASFA comfortable standard includes the cost of everyday expenses such as health, communication, clothing and household goods and reflects community expectations as well as changing lifestyle expectations and spending habits.

"Fortunately, we are seeing a turnaround in term deposit income, and critically, the 1 July increase in the Super Guarantee (SG) rate to 11 per cent will put a greater number of Australians on track to achieve the dignified retirements they deserve," concluded Dr Fahy.

The largest increases in spending categories were medical and hospital services which rose 4.2 per cent in the quarter and 5.3 per cent over 12 months; insurance costs rose 3.5 per cent in the quarter; fruit and vegetables rose 2.4 per cent.

The report found that the price of pharmaceutical products rose by 4.5 per cent and the increase would have been even greater without the reduction in the PBS general patient co-payment applying from 1 January.

Domestic travel and accommodation rose 4.7 per cent in the March quarter and 25 per cent over the year while international travel and accommodation fell by 8.2 per cent in the March quarter as many destinations entered their off-peak season but was up by 38.3 per cent over the year.

The annual increase in gas prices of 26.2 per cent was the highest on record, with an annual increase of 15.5 per cent for electricity.

 

 

 

Keeli Cambourne
29 May 2023
www.smsfadviser.com

David Forrest Download David's Advisor Profile

David Forrest

Director
BEc (Acc), MBA, CPA, FFin

David has been in the Financial Services Industry for nearly 30 years. He was one of the founding Directors of the successful Financial Planning and Stockbroking Practice, Henderson Gregory Forrest, for a decade. Prior to that, he held senior roles in companies such as ING, KPMG Accountants and AMP. David was previously Chairman of OAMPS Superannuation Trustee Board and currently serves as an independent Board Director for several companies.

David’s extensive experience in all forms of superannuation, including Self Managed Super Funds (SMSF), Defined Benefit Funds, retirement funding through Account Based Pensions, stockbroking with a focus on Direct Share Investment, Taxation/Remuneration Planning, Centrelink, Aged Care and business management, equip him to advise expertly on all aspects of Financial Advice.

Those with a particular interest in superannuation/SMSFs, direct share investment, salary packaging or applying for the Centrelink Pension will find his knowledge and ability in formulating and implementing creative, logical and simple wealth creation strategies a valuable asset.

David maintains a strong personalised client service focus, providing tailored solutions for clients.

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David Forrest is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846

Michelle Forrest

Michelle Forrest

Business Finance Manager
B Bus (Acc), CPA

Michelle’s career has spanned across the Financial Services, Retirement Living and Aged Care industries working in the private sector, not for profit and more recently with the state government for over 20 years. Her experience extends to many facets of the financial services industry, having worked in superannuation administration, technical support and financial planning practice administration.

Commencing with AMP and subsequently working in commerce and accounting roles with companies such as Brambles, Adelaide Bank Retirement Services, ECH Inc and SA Health and Wellbeing, Michelle returns to financial services after working in practice financial management at Henderson Gregory Forrest. This wide range of experience from senior accounting and management roles has provided Michelle with a strong background in business administration.

With an astute financial acumen and keen interest in business improvement strategies, Michelle ensures the smooth running of the Integrity Financial Advisory practice providing valued management support to our personalised client service focus.

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Jasmine Smith

Jasmine Smith

Client Service Manager

Jasmine has worked in the financial services industry for over 12 years in all areas of client administration, working with David since 2013.

Jasmine has extensive knowledge and experience in client service including implementation of advice, portfolio reporting, assisting with the establishment of Self Managed Super Funds (SMSFs), term deposit management and a long history of helping clients with their enquiries.

Jasmine’s attention to detail, yet gentle approach, means she is able to solve the trickiest of questions for our client community.

Jasmine has gained her Certificate III in Financial Services qualification.

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Merrilyn Smith

Merrilyn Smith

Senior Client Service Manager

Merrilyn has worked in the financial services industry for over 11 years in all areas of client administration, and is a new addition to our client services team, returning from Melbourne to join the team in June 2019.

Merrilyn has extensive knowledge and experience in client service including implementation of advice, managed fund administration, assisting with the establishment of Self Managed Super Funds (SMSFs) and process improvement for the previous practices she has worked with. Merrilyn’s experience with direct shares constitutes the other part of our administrative support for direct equity investments.

Merrilyn’s warm and caring nature continues to endear her to our clients and she has already established herself as a valued member of our team.

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