7th Nov 2018
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Retirees’ costs rise higher than inflation: statistics
Author: Olga Galacho
self-funded retirees pay highest cost

Self-funded retirees have endured a jump in the cost of living twice the rate of the Consumer Price Index (CPI) increase in the September quarter.

Australian Bureau of Statistics (ABS) data shows that the CPI rise for the quarter was 0.4 per cent across the board, but for self-funded retirees it soared to 0.9 per cent.

The increase from last year’s September quarter to this year’s also hit age pensioners hard.

Year on year inflation was 1.9 per cent, but retired Australians were hit with an annual cost of living rises of 2.3 per cent.

Other types of pensioners and welfare recipients had their costs increase 2.2 per cent over the 12 months.

Employed Australians, however, only felt a rise of two per cent in their living costs.

The Living Cost Indices (LCI) are calculated as a weighted average of eight capital cities for the cost of a “basket” of goods and services. The basket includes food and beverages, tobacco, clothing and footwear, housing, household equipment and services, health, transport, communication, recreation and culture, education, insurance and financial services.

“The LCI for age pensioner households rose 0.6 per cent in the 2018 September quarter, with the main contributor being housing (+1.1 per cent), driven by property rates and charges,” the ABS said.

“Recreation and culture (+1.5 per cent) also contributed to the rise, driven by international holiday travel and accommodation, due to the peak summer seasons in Europe and America.”

The most significant offset for age pensioners was a 1.6 per cent fall in health costs.

“This was driven by pharmaceutical products, due to the cyclical effect of a greater proportion of consumers who qualify for subsidies under the Pharmaceutical Benefits Scheme, reducing their out-of-pocket expenses.”

The universal CPI figure was lower (0.4 per cent) in the quarter because of a reduction in child care costs which age pensioner households do not have to fund.

The LCI for self-funded retiree households rose at twice that rate (0.9 per cent), largely because of an increase in recreational costs of 2.2 per cent for that group in the September quarter.

The offset from lower health expenditure was less pronounced for self-funded retirees, coming in at just -0.5 per cent.

The LCI for this group recorded a bigger rise (0.9 per cent) compared to the CPI because their households spend more on recreation and culture, the ABS said.

There is a detailed explanation of how indices that track price fluctuations are created on the ABS website.

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    COMMENTS

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    Lothario
    7th Nov 2018
    8:20pm
    It's not a problem if you take into account 2 importannt facts:

    1. self funded retirees incomes would have increased substantially over and above their LCI; and
    2. the major increase is in recreational spending which is totally discretionary

    I'm sure self funded retirees have enough nous to ensure their investment returns exceed inflation or adjust spending on discretionary items or both
    OnlyGenuineRainey
    8th Nov 2018
    2:31am
    All very well for the more affluent SFRs, Lothario. Those with lower asset balances are struggling. Not all SFRs have the ability to achieve high investment returns. Those with low balances achieved by saving well may have been educationally disadvantaged or experienced crisis or trauma that makes them very risk averse. Some may have assets that are not liquid but don't return well. My returns are not great and neither my partner nor I have much knowledge of investment, nor the contacts to get good advice. We are very risk averse, having lived in poverty for most of our lives. Our savings are a result of very frugal habits developed when we realised the only escape from poverty was finding ways to live cheaply. But the way we lived cheaply was by doing everything ourselves - building our home and furniture, maintaining our car, making our clothes, growing our food - none of which is possible in today's world in our state of health.

    There are all kinds of circumstances, and ASSUMPTIONS just make you a PRIZE ASS.

    I don't know if I am classed as SFR, as I still work part-time because my income was demolished by the disgusting change to the assets test, leaving me with less than the OAP. With high living costs due to health issues, living in a remote area, and having to feed and substantially cloth four teenage grandchildren for much of the year, I am finding the cost of living rises are far outstripping my capacity to keep up. The big ones are rates, water, insurance, petrol and health costs.

    Of course I could just use savings and rely on a pension later, which would enable a far higher income, but the whole purpose of saving was to avoid that. The system is just forcing people onto the pension by not recognising reality. Younger retirees, with maybe 30 years ahead, are DEFINITELY NOT WEALTHY with only $850,000 between two of them - including non-returning personal assets, furniture, car, etc. And now it's looking like they may very well lose up to 30% of their income in unfair tax!
    Lothario
    8th Nov 2018
    3:00am
    I really hope Shorten doesn’t get in
    He will destroy the retirement dreams of Hundreds of thousands of people
    I just cannot believe how stupid and cruel that man is
    Retired Knowall
    8th Nov 2018
    9:26am
    Shorten is not Stupid or Cruel, he is cunning, ruthless totally self centered and deceitful. Much the same as most of the members of both major parties.
    We need to shake up the monopoly by voting for independents, they can't be any worse than the lot we have in Canberra now.
    OnlyGenuineRainey
    8th Nov 2018
    9:30am
    I agree Retired Knowall. My partner and I were talking about United Australia Party last night. Neither of us like Palmer or what we believe he is trying to do for himself personally and his buddies, but at least they have some innovative ideas. They are not just mindlessly undoing 30-year-old reforms. LNP got it wrong reversing the Howard era assets test change without considering current investment returns and needs, and now Shorten is getting it very wrong reversing a reform that many economists say contributed significantly to saving us from the worst impact of the GST. We NEED NEW IDEAS. We need people who are willing to consider innovative policies.
    Old Geezer
    8th Nov 2018
    12:00pm
    What concerns me more is that Shorten has something much worse up his sleeve if he wins the election. Or he is just putting forward this awful policy so he can bring is something less sinister and we will all think it is OK.
    Sundays
    8th Nov 2018
    12:19pm
    OGR, you would never vote United Australia, if you were one of the thousands put out of work by Clive Palmer. Not just the mines in Townsville but he took the Hyatt Coolum which was the largest employer on the Sunshine Coast and completely,decimated it. Big talker. Hopeless last time, and will be again. No chance of any of his ideas ever getting up because he does not have the right calibre of candidates.
    Sundays
    8th Nov 2018
    12:28pm
    Shorten won’t destroy my dreams Lothario. Nothing could be worse than the current Liberals. They have proved not to care for anyone but the big end of town. Slogans but not real substance. Jobs and growth but a decrease in permanent full time work. Lots of talk about lower power prices, but no follow through, and definitely no concern for social justice. Just remember the Libs reduced the Asset threshold, want to increase the age when people can access the OAP and have the family home included in the Asset test. Who knows what else THEY have up their sleeve. Don’t forget how Morrison became PM, snake in the grass
    OnlyGenuineRainey
    8th Nov 2018
    12:42pm
    I agree, Sunday, but Labor is working with them. They are both pursuing the same goals and playing a game of ''you do/I do'' to get there.
    Old Geezer
    8th Nov 2018
    1:09pm
    My expenses have come down lately not gone up. Insurances reduced, electricity reduced, rego reduced, green sips reduced, internet reduced.
    Old Geezer
    8th Nov 2018
    2:07pm
    Sundays I actually think Shorten has something much worse up his sleeve than what he is telling us. I am hearing all sorts of rumours.
    Retired Knowall
    8th Nov 2018
    2:22pm
    At the risk of being accused repeating myself, give your vote to an Independent.
    Surely there is someone on your ballot paper that is not tied to the major parties. The resultant message to the self centered fraudsters in power now would be "Don't take us for granted">
    The U.S.A had to have a disrupting element like Trump to start to move the American public from their lethargy, look at the increase in voter numbers at the Mid Term elections.
    We need the same motivation, Palmer is not the answer, he is more self absorbed than any of the grubs in power now, but, if we give independents more of a go, more persons of substance will put their hands up.
    1984
    8th Nov 2018
    5:10pm
    Comrade OG bragging again & full of himself, look at me, look at me. You are so full of the proverbial that we can smell you coming miles away
    Old Geezer
    8th Nov 2018
    6:17pm
    Ha ha It just shows that you know I am right.
    George
    8th Nov 2018
    9:27pm
    I agree with Retired Knowall - get rid of Liberal, Labor and Greens - if you want the country to improve, by voting such sitting members last in preferences. Give Independents a chance! That's the real response needed now - avoid the side-tracking comments from trolls.
    Paddington
    9th Nov 2018
    10:12am
    OG, you are electioneering boldly. So obvious!
    floss
    8th Nov 2018
    10:43am
    Give us a break Lothario as I said new name same old bull S.Please read the comment from OnlyGenuineRainey then grow up.
    Sundays
    8th Nov 2018
    12:33pm
    Floss, Lothario is their current name, but they’ve been on this forum before. Supercilious and full of huberis. No concern for those less fortunate. Hopefully, this time they’ll get tired and move on
    1984
    8th Nov 2018
    5:12pm
    Comrade OG is the same. They are both just one big empty vessel with nothing to contribute.
    Old Geezer
    8th Nov 2018
    6:20pm
    ROFL
    TREBOR
    8th Nov 2018
    8:13pm
    ... working from moma's basement.....
    George
    8th Nov 2018
    9:29pm
    Lothario = diablo / olbaid = Raphael! Same old right-wing lines!
    NGE
    8th Nov 2018
    11:22am
    My position in life is very similar to OGR. My husband and I worked hard for over 40 years and then my husband passed away and I had to give up work. I now find that I am living f/n to f/n to make ends meet..to pay gas, electricity, water rates and medical bills all on one income from the pension and a very small allocated pension. I don't know what it is to have a holiday or go to a show or restaurant. Such luxuries will never exist in my lifetime, so Lothario you need to have a good hard look at yourself and show some real compassion. Open your heart if you have one
    Paddington
    8th Nov 2018
    8:52pm
    NGR, you are in a difficult situation being alone. It is so much harder for singles than couples. I hope you have family and friends to make life less of a struggle.
    inextratime
    8th Nov 2018
    11:30am
    It makes me smile when I read the generalisations that commentators apply on this forum. Everybody's circumstances are different. Just because so and so is unaffected by inflation doesn't mean everyone is. There are so many variations in lifestyles that it is impossible to place everyone in the same pigeonhole. What particularly irritates me are the people that boast about their particular case studies and cannot understand why everyone has not followed their example. How disrespectful and unempathetic is that ? Location, family circumstances, job history, health etc, all contribute to the fortune or lack of it that add up to the status people find themselves in when work opportunity ends. So instead of berating or boasting, how about showing some compassion for those who may not be so fortunate. Not everybody who goes to war is able to dodge a bullet.
    Paddington
    8th Nov 2018
    11:53am
    Nice comment! Yes, each one of us has his own story and issues. One may have money but poor health or be lonely. Another may need money to help a loved one in their care. So many stories!
    Lothario
    8th Nov 2018
    3:37pm
    Any self funded retiree couple earning around $40 - $60k, might as well just spend down to the asset threshold and be better off under Shorten's nasty mean franking credit policy

    Those with modest super also better watch out as share prices TANK !!!. Say goodbye to your retirement dreams

    Shorten wants everyone on welfare while labor elite rule over you. Cuba, Ex Soviet Union and China, here we come
    Greg
    8th Nov 2018
    4:32pm
    Haha...
    Whatever you reckon Bozo
    OnlyGenuineRainey
    9th Nov 2018
    12:26pm
    Ssdly, Greg, he's 100% right. I hate the LNP, but what Labor is proposing is going to cause shocking harm. As a struggling SFR, my only viable option will be to buy a bigger house or take an expensive cruise and go on the pension, because my savings are worthless when I'm taxed 30% on the small income I get from them. I know hundreds who are in the same boat, and statistics say there are countless thousands. With all those additional folk claiming pensions, there will be more calls for cuts.
    gerry
    8th Nov 2018
    5:04pm
    Its been noted that Labour MPs have been buying investment houses like mad as Bill is grandfathering old houses..
    Paddington
    8th Nov 2018
    8:48pm
    Seeing as how it is common knowledge wouldn’t those with the means be doing this as well? Why just politicians? There are many wealthy people who are not politicians who acquire property.
    MD
    8th Nov 2018
    5:49pm
    Didn't y'all get to see 'The Conversation' article "Why we should worry less about retirement - and leave super at 9.5%" ? See link:

    https://theconversation.com/why-we-should-worry-less-about-retirement-and-leave-super-at-9-5-106237?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20November%207%202018%20-%201154510436&utm_content=Latest%20from%20The%20Conversation%20for%20November%207%202018%20-%201154510436+CID_fb28cd5721710b82d81823c0edddbe0e&utm_source=campaign_monitor&utm_term=Why%20we%20should%20worry%20less%20about%20retirement%20-%20and%20leave%20super%20at%2095

    Quote (1) Most retirees are financially secure. Many earn more than they did while working, the Grattan institute finds."

    Quote (2) "Retirees of today tend to slow their spending as they age, tend to keep saving in retirement and often leave a legacy almost as big as the nest egg they had on the day they retired."

    Those that reach pensionable age and have little to show for their (presumed ) working life
    must therefore consider the pension - and the many advantageous add-ons - an absolute windfall. Furthermore, it seems as though some few actually consider it necessary for the pension to fund their ability (or former lack of) to 'leave something for the kids' !

    It IS a great life indeed... if both we - and the budget, don't weaken.
    Lothario
    8th Nov 2018
    5:53pm
    So you agree MD that the full OAP funds a pretty good lifestyle
    Old Geezer
    8th Nov 2018
    6:20pm
    I agree MD many people just can't wait to retire as they are so much better of then they were working. They then whinge as they think it is not enough but enough is never enough for them.
    Paddington
    8th Nov 2018
    8:59pm
    OG/Lothario, it depends on the individual. It is harder for single pensioners and those that rent or who have no savings. Individual needs also plays a part. Some have high medical needs for example. If you are a good money manager and do not drink, smoke or dine out, it is doable but forget overseas holidays and cruises unless you have other income or savings. Best not to judge as everyone is unique and their burdens may not be obvious.
    Triss
    8th Nov 2018
    9:36pm
    People in glass houses, OG. Many times you’ve posted that you’re better off now than when you were working but you still have your hand out for free medical and dental procedures, food hampers that should go to the hungry, free resort holidays, discounted petrol and cruises, etc. To keep on denigrating pensioners is somewhat hypocritical.
    Lothario
    8th Nov 2018
    8:43pm
    Those with shares offering franked dividends should hold on for a bumper dividend and share buyback period should labor win

    Companies will use their franking account balances to fund share buybacks and make special dividends declarations to empty their franking balances

    Huge payouts and share buyback means a huge spike in share price

    Cash it up and then give Shorten the finger by moving your assets offshore
    Scoot8
    15th Nov 2018
    2:14pm
    Can only hope and pray Bill Shorten doesn't get in, he will ruin the country. I object strongly to abolishing franking credits to self-funded retirees and keeping them for pensioners. SFR's have bought companies with franking credits to create income, there will be huge rush to pension if these are withdrawn. I have tried not to be a burden on the government, if franking credits are withdrawn , I will be joining the pension brigade. TAP87


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