Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Climbing health care costs squeeze retirees

Emma Rapaport  |  29 Aug 2018Text size  Decrease  Increase  |  
Email to Friend

Page 1 of 1

Retiree

Australian retirees are feeling the financial pinch as they face increases in the cost of health services, transport, and clothing, according to research from Australia’s peak superannuation body.

Couples aged around 65 who aim to live a comfortable retirement will need to spend $60,604 per year and singles $42,953, both up around 0.5 per cent on the previous quarter.

This is according to figures released by the Association of Superannuation Funds of Australia Retirement Standard for the June 2018 quarter.

Couples targeting a modest lifestyle – defined by ASFA as better than the Age Pension, but still only able to afford fairly basic activities – will need to spend $39,442 and singles $27,425, up about 0.2 per cent on the previous quarter.

Rising private health insurance premiums, along with rises in transport and clothing costs are to blame in part for the squeeze on retirees, says ASFA chief executive Martin Fahy.

“Health care costs are a significant burden for many retiree households," Fahy says. "Health care costs in the budgets rose by over 2.2 per cent in the quarter, largely driven by the 4 per cent increase on average in private health insurance premiums.”

Table 1: Budgets for living standards for those aged around 65, March/June quarter 2018 comparison*

ASFA Retirement Standard Table

* All figures assume retirees own their own home. Figures are weekly amounts except for annual total. Annual is 52.2 times weekly. (Source: ASFA Retirement Standard)

Even with bulk billing of general practitioner consultations, Australian retirees face regular out-of-pocket medical expenses on a "very regular basis”, according to research by the Grattan Institute, a public policy think tank.

Specialist procedures and surgery can also cause financial worries for retirees, with the average gap payment for knee surgery about $2000.

Dental expenses are also onerous, with many retirees only receiving limited reimbursement from their private health insurance, and in some cases foregoing dental visits altogether.

“Individuals or their private health insurer have to pay for the bulk of dental care,” according to the Grattan Institute’s report, Mapping Primary Care in Australia. “As a result, about one in five Australians do not get the recommended level of oral health care.”

Transport costs are also squeezing retirees. The cost of transport rose 1.7 per cent in the June quarter, driven by a 6.9 per cent increase in fuel costs. Clothing and footwear due costs were also up due to discontinued specials.

These increases compare to the 0.4 per cent increase in the overall Consumer Price Index for the June quarter.

For retirees aged 85 and over, total budgets have increased by about 0.4 per cent at the comfortable level and 0.3 per cent at the modest level.

Prices are coming down across some categories, including a 0.4 per cent fall in food costs, and a 2.7 per cent fall in leisure expenses, reflecting a fall in domestic holiday travel costs associated with off-peak season for holiday travel.

 

More from Morningstar

• Boral posts $441m profit on US buy, earnings

• RBA upbeat on Asian markets

Make better investment decisions with Morningstar Premium | Free 4-week trial

 

Emma Rapaport is a reporter with Morningstar Australia.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

Email To Friend