Myfan Jordan, social innovation director at Per Capita Australia, predicts the pressure points in 2019 for YourLifeChoices’ Constrained retirement tribes.
The areas of expenditure that will have the biggest effect on the finances of Constrained Couples and Singles in 2019 fall into seven key areas.
With bipartisan agreement on energy policy fading into the distance, the volatility of energy costs will be a key concern.
Although age pensioners and part-pensioners may be eligible for some state or territory-based energy concessions, many are faced with bleak choices to either heat or eat in winter; and buy groceries or run cooling systems in the hotter months.
Even pensioners who own their homes can be vulnerable. Many older properties lack adequate insulation, meaning the costs of staying warm and keeping cool will be much higher.
Older people may also experience a ‘loyalty penalty’, sticking with a known energy provider rather than shopping around on comparison sites for the best deal. Some energy companies have been found to charge long-term customers higher prices.
While cost-of-living pressures continue to affect household expenditure, for older people – known to prioritise bill paying and to avoid hardship programs and grants that are offered to energy consumers – food is often the trade-off.
Approximately 12 per cent of people using food banks are over 65 years of age. (Foodbank Hunger Report 2017). Food insecurity has been shown to negatively affect both physical and mental health.
While some food costs are relatively stable, the price of fresh and more nutritious foods can increase due to extreme weather conditions, and it is likely that the more extreme effects of climate change will continue to push up prices.
It is no wonder there is strong emerging evidence of malnourishment among older Australians who cannot afford healthy diets.
A University of Sydney report released in November describes climate change as a health issue.
Increases in temperature, and particularly heatwaves, pose a considerable health risk for older people, who are more likely to be living with one or more chronic conditions, and for people with disability.
In Victoria, for example, the heatwaves of 2009 and 2014 were linked to the deaths of 374 and 167 people respectively – a rise of more than 46 per cent in the 65 to 74-year age group alone.
In total, the 2009 heatwave, which also affected South Australia, killed 432 people. That is two and a half times the number of people killed in the Black Saturday bushfires.
In the absence of affordable air-conditioning, the power costs of older Australians are likely to put their health at risk during extremely hot weather.
With the property market cooling, and some predicting that home loan interest rate may rise in 2019, some older people with mortgages may find their homes are worth less than the amount they borrowed.
Out-of-pocket health expenses can be a major cost for older people and represent a significant portion of a fixed income.
The Commonwealth Seniors’ Healthcare Card (CSHC) provides low-income Australians with significant discounts on healthcare costs. The card is means-tested by income, and thresholds are indexed annually, most recently rising in September 2018. You can check your eligibility here.
Despite the availability of the CSHC to most Australian pensioners, gap payments for prescriptions, specialists and other medical expenses not covered by Medicare can be significant.
Staying connected is particularly important to older people, because they are more at risk of social isolation and loneliness.
For this reason, transport is a critical enabler and the associated costs are often a barrier. Hikes in petrol prices over the past five years have been significant. Even though there has been a drop in the last quarter, rises next year should be expected.
For older people living in rural areas, who are often more reliant on their cars, petrol prices are often higher than in the city. More than 50 per cent of people in rural areas are aged over 50 and the numbers are growing. Public transport costs can also be a barrier to accessing services and to social participation.
The cost of home internet is significant for all people on fixed incomes. The cost of upgrading computers, mobile phones and so on are high, but these technologies are recognised as increasingly critical for accessing government and other services.
Pensioners on low, fixed incomes are often excluded from choice in the provision of services, meaning that market competition doesn’t always provide the lower costs we are promised.
Does the lack of action on an energy policy concern you? Are you confident your energy costs will go down in 2019?
• Per Capita is an independent, progressive think tank, dedicated to fighting inequality in Australia. It works to create a vision for Australia based on fairness, shared prosperity, community and social justice.