The Age Pension is a sum paid to Australians aged 67 years or older to help fund their retirement.
While the Age Pension is a fantastic tool to help older individuals, it might not necessarily be enough to find the retirement lifestyle that you want.
Here's a breakdown of everything you need to know.
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How much is the Age Pension payment?
The maximum fortnightly Age Pension payment is $1,100.30 for single Australians or older. Couples can get up to $829.40 per person per fortnight.
The rates don't include any additional potential supplement rates.
The amount you'll receive can also vary depending on where you fall under the Age Pension assets and income tests. It is possible to earn a part-payment if your income and/or assets are over the threshold, and the amount is generally calculated on a sliding scale.
How much will a comfortable retirement cost me?
According to Association of Superannuation Funds of Australia (ASFA) defines a comfortable retirement as one which allows Australians to maintain a good standard of living. It assumes you'll keep top-level private health insurance, will own a reasonable car brand, do regular leisure activities, have funds for home repairs and renovations, go for an occasional meal out, and maybe even an annual domestic trip (or an occasional overseas one).
According to ASFA data, a comfortable retirement lifestyle will cost individual Australians around $54,840 a year. For couples, this can be closer to $77,375 a year. That translates to around $2,100 and $3,000 per fortnight, respectively.
You'll note this is significantly higher than the Age Pension payment, meaning that Australians can't rely on the Age Pension alone if they want to retire comfortably.
What about a modest retirement?
A modest retirement assumes you'll hold basic health insurance, a cheap car model (or none at all), a limited home repair budget, minimal utility expenses, limiting dining out, and infrequent travel, and it'll cost a lot less.
In order to live a modest retirement lifestyle, individual Australians can expect to need $35,503 per year, or for a couple this would be closer to $51,299 per year. That translates to around $1,360 and $2,000 per fortnight respectively.
Again, calculations show the Age Pension alone isn't enough to fund what ASFA classifies as a modest retirement.
The verdict – your superannuation will need to bridge the gap
To fund a comfortable retirement, ASFA has calculated that single Australians will need a superannuation balance of around $630,000, or couples would need $730,000.
These sums still also assume you'll earn a part Age Pension. It's not possible to rely solely on the Age Pension if you want to retire comfortably.
