News and Articles

We were delighted to receive some great comments to last week’s newsletter, as well as some really good questions. Two that stood out were in response to Amanda Hardy Lai’s article, How much is enough for a comfortable retirement? Having read Amanda’s article Linda asked a very logical follow-on question: ‘How do you calculate how much you need in retirement funds once you are 70, 75, 80 or older? (It’s) anxiety provoking not knowing whether you have sufficient funds left in pension funds to survive to an advanced old age after you retire. Please can you do an article on that giving some actual figures for Australians in their seventies, eighties and nineties compared to what you would need at 65?’ And Maree endorsed Linda’s question with one of her own, commenting: ‘Really good question Linda. It would be great to get actual insight on how much 70, 75, 80 and older people spend per year, what their situation is e.g. their health, where they live, home or care home, whether they had any unexpected expenses that they didn’t plan for e.g. major home repairs, health issues, replacing major appliances and how/if they managed to do all this and continue living a comfortable retirement. Did they have enough to do any overseas travel, how often, did they go on holidays within Australia, how often?’

Avoiding costly Centrelink mistakes with expert advice from Retirement Essential’s Head of Customer Service, Steven Sadler

Navigating Centrelink rules can be challenging, and many retirees are unsure about their entitlements and how to apply. At Retirement Essentials, we see this confusion play out daily in the questions our members ask.

To shed light on common misconceptions and provide expert guidance, we spoke with Steven Sadler, Head of Customer Service at Retirement Essentials. Steven and his team answer thousands of queries every year, helping retirees to 

understand their Age Pension eligibility, 

submit their applications correctly, and 

avoid common mistakes that could delay or reduce their benefits.

A few weeks before 20 March and September, the team at Retirement Essentials is usually able to predict (within a few cents) the expected Age Pension indexation change. This indexation of the base rate occurs twice a year. The main Age Pension supplement is also adjusted (by CPI); occasionally the energy supplement is increased as well.

Last September’s increase of $26.54 per fortnight for singles ($41.17 for couples) was based upon increases from December 2023 to June 2024 when inflation was running higher at 3.8% per annum. What goes up will almost inevitably come down at some stage, and the annual rate of inflation has now eased to 2.4% for the 12-month period Jan-Dec 2024.

But Age Pension will still rise

The good news is that you can still expect a slight Age Pension base rate increase on 20 March, as two of the three main indicators upon which indexation is based – the Consumer Price Index (CPI) and the Pensioners and Beneficiaries Living Cost Index (PBLCI) – are still higher, albeit by less than one per cent.

The period used to calculate Age Pension indexation is the 6-month period between 30 June 30 and 31 December 2024. Across this time the CPI increased by 0.4 % and the PBLCI by 0.2%. (While the AWOTE is a third measure, it is often not relevant as the couples’ pension needs to fall below 25% of the current AWOTE for this to be relevant.)

What does this mean for fortnightly payments?

Here are our indicative estimates based upon the above increases, using CPI of 0.4% to adjust both the base rate and the pension supplement, as it is the higher of the two measures. (While possible, it is unlikely that the energy supplement will be changed from $14.10 as there is a separate energy rebate still in play. However, in an election year anything is possible.)

Last week, I discussed the most common retirement questions our members ask during strategy consultations with our advisers. One of the big ones is: ‘Do I have enough? Sometimes that thought is closely linked to ‘Do I have enough – yet?’

The real question isn’t just about whether it’s enough, it’s more likely, ‘How can I make my savings last?’ 

Your superannuation balance and investments, spending levels, Age Pension entitlements, and investment choices will all play a role in sustaining your income over time. 

Understanding retirement standards

The Association of Superannuation Funds of Australia (ASFA) provides guidelines to help individuals plan for retirement, which they update quarterly. As of the September quarter in 2024, ASFA’s Retirement Standard suggests that the following is needed:

For couples:

Comfortable lifestyle: Annual spending of $73,031, requiring approximately $690,000 in superannuation savings at retirement.

Modest lifestyle: Annual spending of $47,475, requiring approximately $100,000 in superannuation savings at retirement.

For singles:

Comfortable lifestyle: Annual spending of $51,814, with a recommended superannuation balance of around $595,000.

Modest lifestyle: Annual spending of $32,930, requiring approximately $100,000 in superannuation savings at retirement.

These figures assume retirees own their homes outright and are eligible for a part Age Pension. 

By comparison, the full Age Pension rates are currently:

Couples (combined): $44,855 per year

Singles: $29,754 per year.

ASFA provides detailed budgets for both of these ‘modest’ and ‘comfortable’ retirement lifestyles. A modest lifestyle allows for a slightly better standard of living than the full Age Pension, but still only covers basic needs – requiring a modest superannuation balance of $100,000. 

In contrast, a comfortable lifestyle requires significantly higher super savings to afford a higher standard of living, with additional spending on leisure, private health insurance, household upgrades and occasional travel.

According to ASFA’s latest update on superannuation balances, around 30% of retirees currently meet or exceed the comfortable standard. Their research indicates that, by 2050, approximately 50% of retiree households will reach this level.

Later this week some of us will drown our loved ones in attention, flowers, chocolates and positive messages.

Others will wonder why it’s so hard to get a booking at the local taverna on Friday night.

Yes, it’s Valentines Day on the 14th and a big day in many calendars.

Which led the team at Retirement Essentials to think about the two very distinct money personalities that we encounter on a daily basis; those ruled by their hearts – and those by their heads. Typical traits of the ‘heart-led’ members are:

they can be more concerned about the financial wellbeing of others than themselves, 

they are concerned their money may run out but this just stresses them rather than understanding that they need to take action, and 

they hope it will all work out, but don’t see a way to ensure that it does.

By contrast, those ruled by their heads tend to:

have more confidence in their ability to create and manage an income strategy

realise that the complexity of the Australian retirement income system requires a lot of knowledge of all pillars of income as well as the rules associated with super, Centrelink, property and tax, and

are often diligent about having an income plan but would like an objective review to ensure that they are on track.

You may think that being a rational ‘head not heart’ personality is ‘better’ for your retirement outcomes. But not necessarily. A problem can occur when a rational mind thinks it has a solution but due to complacency or over confidence, vital detail can be missed or misunderstood and solutions can go pear-shaped. Being open-minded is an important attribute when managing money and sometimes people who know less are more open to the right insights and assistance.

And this is why the advice team at Retirement Essentials has created a specific advice consultation  – the Retirement Health Check – for both romantics and rationalists who are entering or part-way through their retirement journey. Typically such people are seeking one or more of the following three things:

demonstration that they will be okay, that their money will last the distance,

reassurance that their understanding of their options is both complete and correct,

a stronger sense of control that their plan is appropriate as well as doable.

Over the holidays, did you host a family gathering and wonder ‘Do we really need a home this large when we only use all the rooms once a year?’. Or did you daydream about what your ideal retirement home could look like? Closer to the grandkids, easier to maintain, or perhaps nestled by the coast with water views to wake up to.

Upsizing, Family-sizing, and the Age Pension

Most people know that the family home is exempt from the Age Pension assets test, regardless of its value. So, you could live in a stunning $6 million home, but still struggle to pay the electricity bill, rising insurance premiums and ongoing maintenance. In such cases, downsizing makes sense: sell the home, buy something more affordable and free up funds to support your retirement income.

But what if downsizing doesn’t leave you with that much of a financial buffer? In many areas, especially where median house prices are climbing, the difference between selling your home and buying something smaller can be minimal. The reality is that moving to a new home, even a smaller one, could cost you more than you’d expect.

Research from the Australian Housing and Urban Research Institute (AHURI) highlights that many retirees prefer to remain in their existing home rather than downsize.  In fact, in 2022 AHURI found around 60% of owner-occupiers aged 65 to 74 years have stayed in the same dwelling over a 15-year period. 

While downsizing is often promoted as a solution, the availability of suitable homes in desired areas is not always guaranteed at a price tag that would leave you with leftover funds. According to the Australian Bureau of Statistics (ABS), the median house price of a residential dwelling in Australia rose to $985,900 last quarter – September 2024. For retirees wanting to move, upsizing might be the best option for them to weigh up, and for others, renovating can offer a practical alternative to changing homes or locations.

We have also had a number of members recently asking us about how moving in with family in a granny flat arrangement would affect their Age Pension entitlements. For some, modifying their home to suit extended family arrangements is a smart way to ensure comfort and security while staying connected to family.

Could upsizing, renovating or ‘family-sizing’ your home be a better fit for your needs? And what effect might these choices have on your Age Pension entitlements both now and in the future?

Your superannuation strategy doesn’t end when you begin drawing your savings in an Account-Based Pension. It’s common for retirees to keep accumulating super through part-time work or lump sum contributions from windfalls like property sales or inheritance.  And while most super contributions can be made until age 75, not everyone knows that once you start an Account-Based Pension (ABP), you can’t contribute to it anymore. But what if you could still roll your ABP back into super, combine it with new contributions, and create an even more flexible strategy?

Here’s how to make the most of your super by combining your existing ABP balance with new super contributions.

Welcome to Retirement Essentials annual affordable travel guide. This year we have again approached the experts for their insider tips on how to get maximum bang for your buck when you travel in 2025. We’ve left the group touring and cruising adventures aside, in favour of local experiences with hostel accommodation and holiday parks front and centre. We’ve also sought the expertise of Amy Gardener from the Seniors in Melbourne website for her insights into affordable city adventures. And for those who love road trips, we asked author and motoring expert, Lee Atkinson, how to make road trips more affordable – and unforgettable. We hope there is something for everyone in this bumper travel guide – and invite your feedback and tips so that other members of Retirement Essentials can benefit from your experience.

Don’t forget, your Pension Concession Card, your Commonwealth Seniors Health Card and your state or territory-based Seniors Card can reward you with discounts and lower transport costs right across Australia.

As 2025 arrives, there are several significant changes coming that could affect your retirement planning and superannuation strategy. Understanding exactly what these changes mean in your particular situation helps you stay ahead.

1. Super Guarantee rate increases to 12% (starting 1 July 2025)

The Super Guarantee (SG) rate will increase to 12% on 1 July 2025, meaning employers will contribute more to your superannuation. This change will increase your retirement savings, especially if you are still working or nearing retirement.

Before (11.5% SG Rate): Annual salary of $60,000, with employer’s super contribution of $6,900 (11.5% of $60,000) per annum.

After (12% SG Rate): Annual salary of $60,000, with employer’s super contribution of $7,200 (12% of $60,000) per annum.

The increase of 0.5% will add an extra $300 to the superannuation contribution annually.

2. Legacy Pensions: New flexibility for older income streams  

From 7 December 2024, holders of legacy pensions (those started before 20 September 2007) will have five years to commute their pension to a more flexible Account-Based pension (ABP), accumulation account, or cash. This will give retirees with older pension products more flexibility to adjust their arrangements to meet current needs.

Learn more about this change.

3. Government-funded parental leave

From 1 July 2025, superannuation will be paid on government-funded Parental Leave Pay, with contributions calculated at 12% of the payment. Eligible parents will receive these contributions as a lump sum, including interest, after the financial year ends. 

Applications for Parental Leave Pay will remain with Services Australia, while the ATO will manage super payments starting July 2026. This change aims to boost retirement savings for parents and is part of the government’s Working for Women strategy.

What you need to know As we head into a new year, there’s that wonderful sense of optimism and opportunity. This often means the chance to do things differently, to make the changes we believe might make our lives better, in whatever way matters most. At Retirement...