The latest Living Cost Indexes (LCI) underscore the fact that many age pensioners are struggling to make ends meet, with higher-than-inflation prices crimping their spending power.
The index, released by the Australian Bureau of Statistics (ABS) this week, differs from the Consumer Price Index (CPI) because it measures the price fluctuations in out-of-pocket expenses for five categories of households. CPI is a measure of inflation.
The latest report shows that in 2017, basic living costs for age pensioners rose by 2.1 per cent, compared to a CPI of 1.9 per cent. Australians earning a wage were out of pocket by two per cent more than the previous year. Welfare recipients, not including age pensioners, were the worst off, having to fork out between 2.3 per cent and 2.4 per cent more to cover their living expenses.
Self-funded retirees fared the best, managing to keep their living costs below CPI at 1.6 per cent.
According to the ABS: “The Living Cost Indexes have been designed to answer the question: By how much would after-tax money incomes need to change to allow households to purchase the same quantity of consumer goods and services that they purchased in the base period?”
In the December quarter of last year alone, the basic costs for self-funded retiree and age pensioner households rose 0.6 per cent.
YourLifeChoices is awaiting clarification from the ABS as to whether the data collected differentiates between pensioners who own their home as opposed to those who rent.
The December issue of YourLifeChoices’ Retirement Affordability Index™ reported that cash-strapped couples who rented allocated 29 per cent of their weekly expenditure to housing. Affluent retirees who owned a home and had private incomes spent just 13 per cent of their budgets on housing.
One YourLifeChoices’ member who spoke on the record about her struggles said she had been forced to take out a reverse mortgage to stay on top of her bills.
Pat Isaacs, 73, said: “By the time I’ve paid rates, body corporate fees, phone, internet, electricity, insurances, fuel and other car expenses, there is not a great deal left for food and other essentials.”
Mrs Isaacs’ story is one of 5000 narratives captured in the YourLifeChoices’ Retirement Affordability Index™, which was compiled jointly with The Australia Institute (TAI).
Writing for the publication, senior TAI economist Matt Grudnoff said there were one in four retirees living in poverty – twice the OECD average of 12.5 per cent.
Do you struggle to make ends meet? Has the cost of living risen faster for you than you can budget for?