JOIN PROBUS TODAY!
AUS: 1300 630 488    NZ: 0800 1477 6287

How to stretch your retirement dollars further

When your earning days are behind you, sticking to a budget is all-important for stretching your retirement dollars as far as possible.

 

No matter how disciplined you are about your spending regime, the rising costs of everyday living can contribute to budget blowout.

So what are the costs that are most likely to throw your balanced budget out of whack?

The Retirement Standard figures published quarterly by the Association of Superannuation Funds of Australia (ASFA) provide some clues to the costs that might require closer attention.

The most recent figures for the September quarter 2018 indicate that couples aged around 65 living a comfortable retirement need to spend $60,843 annually and singles $43,200. This assumes they own their home. These figures rose by 0.4 per cent and 0.6 per cent respectively since the June quarter.

For those living at a modest level the increase was 0.6 per cent for both singles and couples. The increases were slightly above the 0.4 per cent increase for all groups’ CPI, according to ASFA.

Older retirees (those aged about 85) saw increases of 0.3 per cent at the comfortable level and 0.4 per cent at the modest level.

 

Watch travel costs

If you’re prone to packing your bags and heading away on a holiday in either Australia or overseas, it’s worth keeping an eye on how that impacts your budget.

The most significant price increases in the September quarter were for international holiday travel and accommodation, up 4.3 per cent, and domestic holiday travel and accommodation, up 2.4 per cent.

The rise in international holiday travel and accommodation costs reflects the summer peak seasons in Europe and the US.

If you thought you were spending more to fill up the car, you were probably right. Automotive fuel was also among the most significant cost increases in the September quarter, up 1.4 per cent. This was the product of continued increases in world oil prices flowing through to consumers.

Housing expenses were driven higher too, although it was the lowest increase in a September quarter since 1998. Property rates and charges rose 2.3 per cent and utilities 0.8 per cent. The rise in utilities costs was driven by increased water and sewerage costs (1.3 per cent), gas and other household fuels (1.1 per cent), and electricity (0.4 per cent).

Increases in September quarters typically reflect price changes in utilities and annual changes in property rates and charges.

Think you’ve been seeing higher totals on your supermarket dockets? It’s likely there would have been some uptick in food costs as they increased about 0.5 per cent in the September quarter, roughly in line with inflation.

The items most likely to drive up the food and non-alcoholic beverages element of your grocery bill were fruit, up 2.4 per cent, and vegetables, up 1.6 per cent. Adverse weather conditions earlier in the year impacted the supply of fruit and vegetables, leading to an increase in prices.

The drought is likely to continue to put upward pressure on food costs in the year ahead, particularly as the cost of fuel remains relatively high.

You can’t stop these cost increases, but keeping an eye on what’s costing you more means you have more chance of reining in that spending.