Recent research from the Association of Superannuation Funds of Australia shows the cost of living in retirement continues to rise across the Tasman. The cost of a ‘comfortable’ retirement rose 2% over the past 12 months to A$56,339 per annum; and the cost of a ‘modest’ retirement rose by 3% to A$32,555 per annum.
The main contributors to the increase were healthcare costs up 8%, domestic travel & holidays up 6% and fuel costs rose 3%. These are just the things people like to enjoy in retirement i.e. more travel and leisure time; and are more reliant on medical and healthcare.
In New Zealand the trend is the same. The rising cost of living is eating into retirees’ quality of life.
Research last August by the Financial Education & Research Centre at Massey University showed the cost of living a ‘no frills’ retirement for a couple living in a metro area was about $12,500 per annum and about $12,700 per annum for a couple in a provincial centre. A comfortable or ‘choices’ retirement cost about $39,600 per annum in a metro centre and around $36,000 per annum in the provinces.
However, these figures didn’t include housing costs. If you add in the average housing costs according to Massey University, that pushes the cost of living up to around $27,000 – $33,000 p.a. for a modest retirement, and around $50,000 – $60,000 p.a. for a couple living a ‘comfortable’ retirement.
NZ retirees are also facing rising living costs. The December 2012 annual CPI data shows that insurance costs rose 7%, medical and healthcare costs increased 4%; electricity costs rose 5%; and housing & utility costs were up 3%.
A key decision people can make right now is to take an active interest in their retirement and kiwisaver funds. Make sure you are in the right fund to achieve your retirement objectives, as it could make all the difference between a modest or a comfortable retirement in years to come.
Murray Harris
Head of Wholesale & Intermediary Relationships