Living life is a lot more expensive these days, whether you're a retiree or a 25-year-old. Australia's age pension is generous compared to most countries, but it may not be enough.
The maximum normal pension basic rate per fortnight in Australia is $1,002.50, which is $26,065 annualised. The basic pension payment combined for a couple is $1,511.40 per fortnight, or $39.296.40 annualised. There is also a relatively small pension supplement and energy supplement which can add a bit more per fortnight.
Is that enough? How much do you need?
The AFSA Retirement Standard suggests for a modest lifestyle that a single retiree would need $32,417.48 annually, and a couple would need $46,620.05 annually. Those numbers are based on the retiree owning their house outright, which is certainly not a guaranteed thing.
I think there are a few ways that retirees can boost their income, though it's worth checking to ensure that retirees don't pass any asset limits.
Term deposits
If an investor is sitting with cash in the bank, I'd encourage them to ensure they're getting a good return. There are savings accounts and term deposits that offer a rate that starts with a 5%, and lots that offer a high 4%.
Investors can get a solid, safe return these days from cash, so retirees should make sure they utilise that if they want the safety of cash.
ASX dividend shares
Investing in ASX dividend shares is one of my favourite ways to boost my passive income.
There are lots of companies within the S&P/ASX 200 Index (ASX: XJO) that pay appealing, fully franked dividends. Not only are the dividend yields attractive, but companies have the ability to grow their payouts over time if profit grows too.
Some ASX companies have long track records of dividend growth, such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Sonic Healthcare Ltd (ASX: SHL) and Brickworks Limited (ASX: BKW). Others (usually) offer a solid dividend yield and strong market power, such as Telstra Group Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES).
REITs
We can also find real estate investment trusts (REITs) on the ASX, which allow us to invest in businesses that own large property portfolios across the country.
Commercial property can offer an attractive mix of yield, consistency and long-term rental income growth.
Some of my favourite REITs include farmland landlord Rural Funds Group (ASX: RFF), logistics and industrial property owner Centuria Industrial REIT (ASX: CIP), and healthcare property owner Healthco Healthcare and Wellness REIT (ASX: HCW).
ETFs
Owning an exchange-traded fund (ETF) could be useful for dividends because it means owning a basket of shares in a single investment. ETFs typically offer good diversification because they invest in a range of businesses and industries.
Some ETFs I'd be happy to own for income if I were a retiree include Vanguard Australian Shares Index ETF (ASX: VAS), the UK-focused ETF of Betashares FTSE 100 ETF (ASX: F100) and the India-focused Betashares India Quality ETF (ASX: IIND).
Owning a variety of assets as a retiree could make a lot of sense, boost income and help pay for retirement.
