As the golden years approach, many Australians look forward to a well-deserved retirement, envisioning a time of relaxation and the freedom to enjoy life.

However, the reality for many is proving to be less idyllic, with the rising cost of living casting a shadow over retirement plans.

The Centrelink Age Pension, while a crucial safety net for many, is increasingly seen as insufficient for covering the basic needs of retirees, prompting experts to sound the alarm on the importance of seeking retirement advice.

The Age Pension, which recently increased to $1,144.40 for singles and $1,725.20 for couples per fortnight, is falling short of what many Australians over 60 believe is necessary to live comfortably.

According to a survey by National Seniors and Challenger, 90 per cent of Aussies over 50 stated that the pension alone wouldn't cover their basic needs, even if they owned their home outright.

Half of the homeowners surveyed echo this sentiment, estimating they require an additional $10,000 annually for singles and $15,000 for couples to meet their living expenses.

Research found Aussies think they need an extra $10,000 a year or $15,000 on basic retirement needs. Credit: Unsplash

National Seniors Australia CEO Chris Grice has highlighted the gap between the pension and the actual cost of living, which includes expenses such as private health insurance, heating and cooling, and vehicle and home maintenance.

‘This research clearly shows that many older Australians are struggling to reconcile the cost of living with their retirement income,’ Grice said.

‘It’s not just about making ends meet; it’s about ensuring that retirees have the financial security to live with dignity and peace of mind.’

The Association of Superannuation Funds of Australia (ASFA) has estimated that singles need $33,134 per year for a modest retirement and $52,085 for a comfortable one, while couples need $47,731 and $73,337, respectively.

These figures assume the retiree owns their home outright and are significantly higher than the current Age Pension rates.

The story of Jenny Wynen, a former carer who retired three years ago, illustrated the concerns many Australians face as they approach retirement.

‘I was of the impression that you needed $1 million to retire. Being single, I thought I would be having to do this in my 70s, and it is a daunting thought,’ she said.

‘You don’t want to do that because most people want to retire when they are healthy and not wait until they have worn themselves out.’

It was only after receiving an inheritance and seeking financial advice that she discovered she could afford to retire earlier than anticipated.

This case underscores the importance of seeking retirement advice, a step that research from the Association of Superannuation Funds of Australia (ASFA) found nearly half of all adult Australians have not taken.

‘It means many Australians may end up worse off than they should be in their post-working lives, simply because they haven’t been empowered with the relevant guidance,’ ASFA CEO Mary Delahunty said.

Obtaining guidance is crucial for a secure retirement, whether through a financial adviser, friends and family, online resources, or super fund advisers.

However, the cost of financial advice, which can be upwards of $3,500, remains a barrier for many, according to Delahunty.

Despite the cost, Wynen's experience shows that investing in professional advice can be worthwhile, as it helped her establish a lifetime annuity with her superannuation and savings, providing a guaranteed income alongside her part-pension.

‘After speaking with [a financial adviser], we looked at all my finances and worked out what I could live on,’ she said.

‘It worked out that I could have a comfortable retirement.’

Key Takeaways

• The Age Pension in Australia is considered insufficient by many Aussies to cover basic retirement needs, despite recent government indexation increases.
• Research indicates that a significant number of Aussie retirees may struggle with living costs like health insurance and home maintenance, with singles needing an extra $10,000 annually and couples an extra $15,000 on top of the Age Pension to meet basic needs.
• The Association of Superannuation Funds of Australia (ASFA) estimates that a modest retirement requires $33,134 per year for singles and $47,731 for couples, amounts that are above the current Age Pension rates.
• Australians are encouraged to seek retirement advice, with findings suggesting that many adults, especially those over 65, have not consulted any source of information on preparing for retirement, potentially leaving them worse off.

Have you found the Age Pension sufficient for your needs, or have you had to seek additional financial advice? Share your experiences and tips in the comments below.

 

[Phantom55]

I agree, age pension should definitely be an entitlement in acknowledgement of a person's 30 - 40+ years given to the workforce.

In this regard, seniors who have worked and saved over these years should not be subject to penalty/denial of pension due to asset ownership.

Many in this category scrimped and denied themselves things, they too could have spent their incomes every week/pay period but didn't.

it was originally an entitlement and a deduction was made from our wages (separately ) called social security contribution...later to be amalgamated into the tax deduction, and it WAS an entitlement. up to around the mid sixties

 

[IAN3005]

The presumption is that divorced women (and men) have received a successful; or at least fair; settlement, that we have superannuation and an inheritance. There are MANY slipping between ALL of those cracks as homeless, hand to mouth seniors.

Divorce killed me as far as living the life I planned on in retirement.

 

[IAN3005]

I pays to get a divorce then you have two pensions.

 

[Aussie all the Way]

I am just grateful for receiving an Aged Pension. There is no money left over for frivolous items, I dont' buy chocolate or biscuits. It is very basic food for myself. Unfortunately, I have a cat with two illnesses who has to have special food, but that is my choice to keep her healthy buy bying these foods. More would be nice, but where is the money coming from to give pensioners an extra bit. I don't think this country could afford to increase the Aged Pension.

Of cause this country can't afford to pay retirees a decent pension this Gov is busy paying the unemployed to continue to sit at home and do nothing, pay for people to put their kids into child care, Tax cuts all of these things should not happen. There is Nothing going in to the public coffers it's all going out, out, out. My Opinion.

 

[IAN3005]

I call for an additional $600 plus a week... just my opinion.

 

[Aussie all the Way]

Yes. Planning for retirement starts at least 20 years before you actually stop working. Most people who complain have not done the hard yards & then expect everything handed to them for no effort. I know there are some sad cases of I'll health etc, but for the most part it's people's own lack of planning & saving.

What happens to people when things like the GFC hits you we lost $200k so we planned and we are on the pension because of circumstances beyond our control.

 

[My Daisy girl]

I feel the age pension is very generous and know that my parents actually save money. Some people couldn't budget if there life depended on it.

 

[Dennis]

The Aged Pension is not enough to live on especially when you’re 75 and you pay rent and all your bills you’re lucky if you have 100 a fortnight left to live on maybe less like 60

I do not know why more Australians did not buy there own homes, when we arrived in Australia with not much money our first target was to buy a block of land and then build a house on it, It was a struggle but we achieved it and it is now paying off.

 

[rooboy33]

tony abbot should be made to pay back the pension money he stole and lost in bad investment

 

[rooboy33]

lost my super when i went on workcover told i had to use it before i could receive workcover payments leaving nothing to fall back on thanks to jeff kennet the low life

 

[Reet]

I find I have to use savings to supplement my Pension. It is difficult to maintain a house as old as mine and buy food and travel expenses are ridiculous. The Government should have their pension cut to a certain number of years according to how many months they served on the government then they might realise how the rest of us struggle. Why should retired politicians have a life time pension of a large amount if they only served a few months representing the public they aare supposed to serve? It doesn't make sense when you realise the rest of us paid taxes to obtain a pension of a very small amount.

 

[steamyjack]

My wife and I were shocked to find we pay TAX on our pension because our small part-time jobs push us into another tax bracket.So,to begin with our pension is reduced by 50c/dollar over the allowance of $300 f/night on top of the normal pension rate.That's tax number one.Then we pay tax again on the amount over the tax free thresh hold of $18200.A thresh hold which has remained fixed over the last four years.This is where they get you.They make a loud noise about the six monthly inflation adjustment but they say nothing about the claw back they get when by NOT indexing the tax brackets,you move into a higher tax bracket and have to pay tax, or more tax, on your income.Income, whose purchasing power has been reduced by inflation. The low income amounts of [a]$1602 and $700 are also not indexed, so they lose a portion of their effectiveness.This is why governments love inflation at heart.
There should be NO taxation without indexation. Period.

 

[GillyH]

this subject is like to opening a can of worms, I personally believe this system has failed, when I see what refugees get, what this illfounded NDIS system is rorted, and a person who has paid taxes, get the short end of entitlement, could go on for a lot more that needs looking at, but age pension in this country is in a mess, do not have much faith in this current mob of crooks to resolve it.

 

[GillyH]

I am just grateful for receiving an Aged Pension. There is no money left over for frivolous items, I dont' buy chocolate or biscuits. It is very basic food for myself. Unfortunately, I have a cat with two illnesses who has to have special food, but that is my choice to keep her healthy buy bying these foods. More would be nice, but where is the money coming from to give pensioners an extra bit. I don't think this country could afford to increase the Aged Pension.

I have family here from the UK, their pension is very minimal & the cost of living very similar to ours. I think the US is similar. We are in the lucky country. Compared to Asia. I will be happy to get the aged pension in a few years. We have been working out our living costs over the past 18 months putting all our expenses into a spread sheet. Which has worked out to under the fortnightly pension. This has included our private health insurance, no discount on our bills or rates, going out for a meal monthly. We aren't extravagant, own our home, which I am grateful we don't rent.

 

[GillyH]

I find I have to use savings to supplement my Pension. It is difficult to maintain a house as old as mine and buy food and travel expenses are ridiculous. The Government should have their pension cut to a certain number of years according to how many months they served on the government then they might realise how the rest of us struggle. Why should retired politicians have a life time pension of a large amount if they only served a few months representing the public they aare supposed to serve? It doesn't make sense when you realise the rest of us paid taxes to obtain a pension of a very small amount.

They also earn ridiculous salaries to put aside a decent amount into their superannuation. I don't think they should get a politians pension!

 

[GillyH]

multiply 15000 by every pensioner who has not had the sense to save for old age and plus those who have (and i do not call 50 old). where does that money come from . of course the wizard.

Unfortunately, some of us are trying to save for old age. But the government aren't hard enough on the long term unemployed, who choose to keep living off welfare who are dodging the system!

 

[Gsr]

pensions, jobseeker, youth allowance, none of them pay enough for anyone to live on. Unless you have money from other sources to rely on you will be living well below the poverty line. I am in my 70s, still working part time and don’t know if I will ever be able to afford to retire. Hubby retired 8 years ago due to ill health. We own our home, which we did without many things, like holidays, new cars, new clothes etc to make sure we had it paid for before we became pensioners. We still had to dip into hubby’s super to pay the rest of it off after he retired. We don’t have huge super funds, having worked half our lives before super became a thing, and having worked in low paid, physically demanding jobs all our lives. We came from poor backgrounds so never had any inheritances to help us out. We live simply, eat basic meals, haven’t had a holiday since 2016, rarely eat out or have takeaway, don’t spend money on birthdays, Christmas, anniversaries or anything else for ourselves, so we are by no means living an extravagant life. We lose close to $400 a fortnight from our pensions because I work, but because I work we are about $400 a fortnight better off moneywise than just being on the pension. I recently worked at the council election, my pay was $646, great money for the day, but we lost another $400 of our pension, so in reality I made about $200 extra for the fortnight. We live in a fairly large home, which we could downsize, but why should we have to when we have worked for all our lives to pay for it and like where we are, have good neighbours, a large yard where hubby can have a garden, a nice quiet cul de sac with only 8 homes in it, and only 1 of them have young kids now. i would have been able to be retired by now had the government not ripped off part of our pensions because I work, as the extra money would have given us a chance to build up some savings by now. But no, they don’t want to see anyone living below the poverty line, or anyone without wealth, improve their life, so they keep tightening the screws they use to hold us down. All governments are the same, no matter which party is in power.

 

[IAN3005]

What happens to people when things like the GFC hits you we lost $200k so we planned and we are on the pension because of circumstances beyond our control.

you canplan all you want - divorce takes care of that......