Data not portraying retirees’ lived experience
There is a major disconnect between the expectations of the Reserve Bank on inflation and the reality being lived by Australian retirees, according to research consultancy, Milliman.
In an analysis released today, Milliman said that Australia’s newly revamped consumer price index (CPI) may have provided a more accurate picture of what the average household is spending its money on, but it is no closer to solving the problems faced by retirees.
It said the basket of goods being used by the Australian Bureau of Statistics (ABS) differs radically from the average retiree, whose cost of living steeply declines through retirement.
The Milliman analysis said that the revised ABS measure of CPI suggested the average household’s expenses had been rising slower than expected, but noted that its own Milliman Retirement and Expectations Spending Profiles (ESP) had revealed that retirees’ actual expenditure falls by about eight per cent between the age 65-69 and 80-74.
“This is a major disconnect given more than half of the balanced pension funds (59 per cent) rank their performance against CPI,” it said.
It said the new ABS CPI weightings had shown rising rental costs driving up the average household expenditure which rose from 13.2 per cent to 14.8 per cent, with the ABS also estimating housing expenditure for self-funded retiree households at 12.1 per cent and 23.4 per cent for pensioner and disability households.
However, it said the vast majority of retirees owned their own homes, and according to the Milliman Retirement ESP spent just seven per cent of expenditure on housing.
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