You are not imagining it or over-reacting, a study has revealed that the Age Pension is not enough to live on, even if you own your own house.
National Seniors Australia (NSA) and Challenger have released a study that shows the two cornerstones of government policy to provide security to older Australians – homeownership and an indexed Age Pension – are simply not keeping up with the reality of the cost of living.
The National Seniors Social Survey of 4700 Australians aged 50 and over found that homeownership doesn’t guarantee financial security, with nearly 90 per cent saying that relying solely on the Age Pension, without additional income, is insufficient for a basic lifestyle in retirement.
It’s a finding backed by YourLifeChoices, which found CPI indexation for the Age Pension is failing to keep up with the cost of living.
Basic cost of living not enough
Half of surveyed homeowners said they would need $10,000 (singles) and $15,000 (couples) more than the Age Pension per annum to meet anything more than the very basics.
The survey also confirmed growing concern that seniors need more support navigating the financial side of retirement.
Earlier this year Australian Prudential Regulation Authority (APRA) deputy chair Margaret Cole told the audience of super industry figures that too much time, money and marketing was going towards attracting new members (and their money) and not enough on meeting member needs post-retirement.
“Members in the accumulation phase share one simple, if obvious, need: to build assets to fund their retirement,” she told the audience.
“By sharp contrast, the needs of members in the retirement phase of superannuation are far more diverse, and understanding and supporting these needs will be complex.”
For respondents of the NSA/Challenger survey who hadn’t received adequate advice, 42 per cent said they wanted to know more about aged care cost calculations followed by investment options (34 per cent), and options to balance spending and saving (22 per cent).
No support
National Seniors Australia chief executive Chris Grice said the results highlighted the growing concern among seniors that they don’t have the appropriate support to plan for retirement.
“We found that calculating aged care costs was the topic most people wanted financial advice about,” Mr Grice said.
“Older Australians feel anxious about the prospect of needing aged care and the unknown costs associated with it. We must ensure seniors are not left to navigate these challenges alone, without adequate guidance or resources.”
The retirement experience in Australia is rapidly transforming and financial institutions appear to be struggling to support their customer base to keep up with the change.
Once upon a time, when people retired the vast majority were expected to be supported by the Age Pension for almost all of their retirement requirements.
But with the superannuation scheme maturing and life expectancy increasing, that model is rapidly receding in the rear-vision mirror.
Challenger head of retirement income Aaron Minney said Australians needed help to best use their savings to live life to the fullest, at every stage in retirement.
“We’re living longer and it’s essential for retirees to plan for 30 years or more in retirement. With the right guidance, we can ensure that people are financially prepared for aged care when they need it, and can enjoy an active retirement, knowing they are ready,” Mr Minney said.
Aged care concerns
Paying for aged care has become a dominant concern for older Australians in 2024, with 60 per cent of survey participants worried about how they cover these expenses, while in 2021 Challenger and National Seniors research found that only 38 per cent of people had thought about aged care costs.
Increasing living costs and inflation have created a divide among older Australians. Only half of those with less than $350,000 in savings feel financially comfortable compared to 84 per cent of those with more than $350,000, highlighting a significant gap of 34 per cent.
When respondents were asked how they would spend an extra $100 per week, one-third (33 per cent) said they would save the extra money for later spending – such as a holiday or other big-ticket items – while another 29 per cent stated they needed the funds for their everyday essentials.
Specifically, housing costs, including rent and mortgage payments, were a major concern for those feeling less financially secure.
“This research clearly shows that many older Australians are struggling to reconcile the cost of living with their retirement income. 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,” Mr Grice added.
The National Seniors Social Survey is an online annual survey of approximately 5000 older Australians aged 50 years and over. The survey was conducted in February 2024, primarily amongst National Seniors subscribers and members but all Australians aged 50-plus were eligible to take part.
Do you think the Age Pension indexation is meeting the cost-of-living increases? Why not share your thoughts in the comments section below?
Also read: Super contribution rules ‘confusing’, older Aussies say
Hi,At 86 I`ve usually managed with the pension rises JUST to say covering Living costs and getting on with it!!
But time to speak up!
Albanese has to GO!
The COST OF LIVING today far exceeds what the pension pays (even though one should be grateful) We now shop at FOODBANK,borrow from our family and see any savings dwindling to nil.
Others of my ilk ALL say the same.
Its become HARDER than WW2 times
I ll be glad to be out of it all if this is THE GOLDEN YEARS!!!
I don’t see how Albanese has anything to do with it. Inflation is occurring globally not just in Australia. IMO it would be the same under Dutton.
But the indexation needs to better reflect the costs of things that most pensioners actually purchase and those necessities of life have risen in price much more than the indexed pension increases. Many essential items have risen 30 to 40 percent over the past two years while the pension has increased by less than half that amount.
NO – it is not adding up. I have to make the embarrassing comment that I actually cried the other night. I am a single 72yo pensioner, and I had received my car renewal notice – with an increase of 55%! I nearly feinted, especially as the excess had increased, and the agreed value had dived. I rang the company, but they would not budge even one cent. My car has not even done 5000kms in the past year – I bought it in 2016, and has only just hit 43,000kms. I have 2 steering wheel locks on it, car is in a very secure highly alarmed carport, and I recently contemplated using most of my savings to put a security gate across my driveway. I have NEVER made a claim, and live a low risk area – as confirmed by police.
BUT – even with all this security, it makes not one cent of difference. I then got quotes from 14 other companies. ALL had higher excess, and lower agreed value. Some would not even cater to agreed value. The lowest increase I could find was the very generous 46%. A well known and well advertised Seniors Insurance Company had an increase of 143%!
How the hell am I am supposed to survive, let alone live, with these outrageous increases? Just how long before I totally give up, because that is where I am heading?
Try the Over 50’s Insurance backed by Allianz.
I have cut back on a lot of things but my rent is going up by $50 in November and that is government housing.
Grocery bill has doubled.
Politicians and CEOs need to be on a pension for a month when all the bills come in and wonder how they are going to pay them.