For many Australian retirees, a reliable, growing income stream is the key to financial peace of mind.
With term deposit rates easing and cost-of-living pressures high, dividend-paying shares on the ASX remain a popular option for those looking to generate passive income and preserve capital.
But not all ASX income shares are created equal. The best options for retirees tend to offer a combination of strong yields, consistent payments, and exposure to quality businesses that can navigate economic ups and downs.
With that in mind, here are a few of the best ASX income shares to consider for a retirement portfolio in 2025. They are as follows:
APA Group Ltd (ASX: APA)
The first ASX income share for retirees to look at is APA. It is Australia's leading gas infrastructure business, owning and operating critical energy pipelines and storage facilities across the country. Its revenues are largely tied to long-term contracts, providing predictable cash flows and supporting its history of reliable, growing distributions.
APA's yield has typically been above average over the years, making it an attractive choice for retirees who want steady income. And with the global energy transition underway, APA's infrastructure is expected to remain essential for years to come.
Macquarie has an outperform rating and $8.14 price target on its shares. As for income, it is forecasting dividend yields of 6.9% and 7% for FY 2025 and FY 2026, respectively.
Telstra Group Ltd (ASX: TLS)
Telstra has transformed itself over the past few years, streamlining its operations, investing in infrastructure, and delivering strong cash flows. It is now a stable ASX income share that provides retirees with consistent, fully franked income.
Telstra's critical role in Australia's communications infrastructure — from mobile networks to broadband — gives it a defensive moat, making it less sensitive to economic cycles. For retirees looking for a steady income stream, Telstra could be a name to consider.
Macquarie certainly thinks this is the case. It recently upgraded Telstra's shares to an outperform rating with a $5.28 price target.
In respect to dividends, the broker is forecasting fully franked yields of 4.1% and 4.5% in FY 2025 and FY 2026, respectively.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
For retirees who prefer diversification without the need to pick individual stocks, the Vanguard Australian Shares High Yield ETF is an attractive option. This ASX ETF provides exposure to a basket of high-yielding Australian companies, including banks, miners, and industrials.
With a dividend yield of around 5% and low management fees, this fund offers a simple, low-cost way for retirees to generate consistent income while diversifying risk across multiple sectors.
