Age pension rises $37 per fortnight today

Is the pension enough to fund your retirement?

Single pensioners will get an extra $36.80 per fortnight under inflation adjustments to the age pension effective today.

This raises the full pension payment to $1,237.70 per fortnight.

Couples on the full pension will receive an extra $27.80 per partner, per fortnight, or $55.60 combined per fortnight, from today.

This increases the full pension to $933 per partner, per fortnight, or $1,866 combined per fortnight.

Elderly couple using laptop at home while drinking a cup of coffee.

Image source: Getty Images

Is the pension enough to fund your retirement?

No, it's not.

Annually, the newly adjusted full age pension totals $32,180.20 for singles and $48,516 for couples.

The ASFA Retirement Standard, which is considered Australia's benchmark retirement budgeting tool, lays out the costs of living today.

AFSA says a comfortable retirement costs $56,166 per year for single homeowners and $78,998 per year for couple homeowners.

A modest retirement costs $36,548 per year for single homeowners and $52,690 per year for couple homeowners.

For renters, a modest lifestyle costs $51,418 per year for singles and $69,376 for couples.

ASFA does not provide a cost estimate for a comfortable retirement for renters.

These figures are in today's dollars, and ASFA adjusts them quarterly to account for inflation.

ASFA lays out exactly what it means by a 'comfortable' retirement and a 'modest' lifestyle here.

What's the gap?

For a comfortable retirement, single homeowners receiving the full age pension need to plug a $23,985.80 hole every year.

Couple homeowners aiming for a comfortable retirement need to find $30,482 per year to cover the gap.

For a modest retirement, single homeowners receiving the full pension need another $4,367.80 to cover their living costs.

Couple homeowners getting the full pension need to find $4,174 per year to fund a modest retirement lifestyle.

Single renters on a full pension face a gap of $19,237.80 per year to fund a modest retirement.

Couple renters on a full age pension need to find $20,860 per year to fund their costs of living.

So, how do you find that extra money?

The most obvious way, of course, is superannuation.

When people retire, they typically transfer their superannuation from the accumulation phase into an account-based pension.

This moves their super into what's known as the retirement phase, where investment earnings are generally tax-free.

Pension payments from your superannuation are also generally tax-free once you're aged 60 or over.

But there's a catch…

If you have a large amount of money in superannuation, you're unlikely to be eligible for the full age pension from Centrelink.

However, as you draw down your super throughout retirement, you may eventually become eligible for the full payment, depending on the value of all your assets combined.

The pension is means tested using an assets test and an income test.

Assessable assets include your superannuation, ASX shares, bonds, investment properties, cash, and home contents.

Under the assets test, single homeowners whose assets are worth less than $333,000 qualify for the full age pension.

Single homeowners whose assets are worth between $333,001 and $745,750 are eligible for a part-payment.

Couple homeowners whose assets are worth less than $499,000 qualify for the full age pension.

Couple homeowners who have between $499,001 and $1,121,000 in assets are eligible for a part-payment.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retirement

Side view of a happy senior woman smiling while drawing as a recreational activity or therapy outdoors together with the group of retired women.
Retirement

CBA vs Coles shares: Which is the better buy at age 50?

CBA and Coles are Aussie blue chips, but which is better if you’re investing a large sum at 50? Here’s…

Read more »

Senior man looking at his laptop and pondering something.
Retirement

CSL vs CBA: Which ASX share is best for SMSFs?

We pit CSL against Commonwealth Bank to see which ASX blue chip offers SMSFs the best mix of dividends, franking,…

Read more »

Man looking at his laptop and pondering data.
Retirement

Wesfarmers vs Qantas: Which ASX share suits a 60-year-old investor?

We compare Wesfarmers and Qantas shares for income, stability and value – which looks right for the retirement-minded investor?

Read more »

Couple holding a piggy bank, symbolising superannuation.
Retirement

How much do I need to retire on $85,000 a year at 50?

Investors can build significant dividend income by age 50.

Read more »

Man looking at a laptop with his hands on his head, with his partner trying to talk to him.
Retirement

6 costly mistakes that will slash your Age Pension payment

One of these errors could cut your payment in half. Or worse, eliminate it entirely.

Read more »

Elderly couple dressed up with capes on.
Retirement

Why this ASX dividend share is a retiree's dream for 2027

I think this ASX dividend share offers a lot of positives for retirement.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Retirement

54,543 shares of this high-yield ASX dividend stock pay an income equal to the Age Pension

I’m backing this business to continue its amazing payout record.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Retirement

How much do I need to retire on $110,000 a year at 65?

This is what it would take to generate $110,000 a year at 65.

Read more »