Report highlights inflation effects for retiring women

Cheryl Haines.

A new State Government report reveals that Brisbane’s annual inflation rate is growing faster than the national average, with financial experts cautioning that this is more likely to decrease quality of life in retirement for women than men.

The report, released by the Queensland Government Statistician’s Office (QGSO), shows that Brisbane’s headline consumer price index (CPI) rose by 6.3 per cent over the financial year ending June 2023 – higher than the national average which dropped from 6.1 to 6.0 per cent.

The figures also mean Brisbane has the third-highest annual inflation rate among all capital cities in Australia.

This news comes after ABS data showed Brisbane was hit harder by inflation than any other capital city in Australia in the three months to March 2023.

Protecting women’s retirements from inflation

Cheryl Haines, a registered financial planner at NGS Super’s Brisbane office, said women in Australia retire with $136,000 less in superannuation than men, on average.

“Unfortunately, Australia’s gender pay gap is still at about 13 per cent. In real terms, it means that women retire with a lot less in super than men,” she said.

“Inflation increases the cost of living and erodes the value of money you have saved up over time. Since women are starting from a lower base, Brisbane’s fast-growing inflation is much more likely to affect the quality of life women can have when they retire, compared to men,” she said.

Brisbanites increasingly worried about inflation and super

Ms Haines has seen the capital city’s burgeoning inflation rate impact retirement planning for Brisbanites over the past 12 months.

“We’ve seen a marked increase in the number of Brisbane based members with concerns about how inflation is affecting their super,” she said.

“While women are hit harder, inflation has an impact on everyone. So regardless of your age or gender, you should be factoring Brisbane’s inflation levels into your financial plans to ensure you have enough money for the future,” she said.

Ms Haines said inflation also affects superannuation planning.

“With state inflation at 6.3%, your annual super return must be at least 6.3 per cent to maintain your spending habits. In other words, if your super return is 9 per cent per annum, then your return, when adjusted for inflation, is 2.7 per cent per annum.

“You’ll be more likely to maintain your standard of living in retirement if your investments generate returns higher than inflation over the medium to long term,” she said.

Ms Haines also said there are various strategies that can help mitigate the effects of inflation on retirement plans.

“Fortunately, there’s a lot that can be done to help protect your super when inflation is high, as it is right now. What’s important is getting in on the front foot and making proactive decisions to safeguard your retirement plans from inflation, and this is especially true for women.

“The sooner you start planning, the stronger your financial position will be,” she said.

Four Ways To Mitigate The Effects Of Inflation On Your Retirement Plans

– by Cheryl Haines, Certified Financial Planner

Consider the risks

Ensure your super savings are invested according to your risk profile. Don’t forget that for many of us retirement may be 10 or 20 years away. The fact we are living longer means the level of risk you can take with your super is often underestimated. Try not to be influenced by short-term market volatility. Investing for the long term can help offset the effects of inflation and help boost your super balance – and therefore your future retirement lifestyle!

Don’t miss out on the ‘added extras’

Making a small voluntary contribution to your super account (let’s say just $10 a week) can make a big difference in mitigating the effects of inflation in the long run. And you may be eligible for the Government co-contribution which is another boost to your retirement savings (subject to conditions).

Get educated

Many super funds offer free webinars and seminars to their members, along with a range of fact sheets and guides, which can help demystify super. The more you know, the easier it will be for you to make smart decisions to protect your retirement plans.

Seek expert advice

Super funds often offer a range of advice services, and the great news is that some of these may be provided at no cost to you. It’s worthwhile seeing what your super fund offers. There are so many planning strategies available that the sooner you understand what strategies may be relevant to your situation, the sooner you can start offsetting the effects of inflation on your hard earned cash.

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