As the major source of income for 67% of Australian retirees, the Age Pension provides the most extensive form of retirement funding. 

But it’s easy for those on a full Age Pension to feel disempowered as this fortnightly income is below the recommended amounts for those living in retirement (Super Consumers Australia puts it at $34,000 for singles and $48,000 for couples).

While the good news is that the Age Pension is a safety net for all older Australians, the bad news is that it’s just not enough – even with the 20 March increase.

There are three components to an Age Pension entitlement that are received by all who are entitled to a pension: the base rate, supplement, and energy supplement.

Per fortnight	Maximum basic rate	Maximum pension supplement	Energy supplement	TOTAL
Single	$1,002.50	$80.10	$14.10	$1,096.70
20 March increase	$18.05	$1.45	$0	$1,116.20
Couple each	$755.70	$60.40	$10.60	$826.70
Couple combined	$1,511.40	$120.80	$21.20	$1,653.40
20 March increase	$27.21	$2.15	$0	$1,682.76

*To understand how this is calculated, see the endnote

The base rate of the Age Pension was last changed permanently by the Rudd Government in 2008. The Australian Council of Social Services argues that another such permanent increase (as opposed to regular indexation) is overdue.

What options do pensioners have if they can’t make ends meet?

There are a number of additional retirement income options available in Australia.

Firstly, there is work. Older Australians can also earn up to $11,800 per annum from work income, if they are on an Age Pension.

However, in reality, much of the work retirees undertake is valuable but unpaid.

Australian retirees will often have super savings, some have private investments, and others have a family home, either owned outright or with a mortgage.

Each of these additional forms of savings can contribute to income in retirement.

For most baby boomers, superannuation at retirement is modest – the median amount per household is around $200,000, which has to meet 25 years of active longevity.

To boost any work and super, more and more Australians are accessing the equity held in their homes.

There are two main ways of doing this, through the federal government’s Home Equity Access Scheme (HEAS) or through a private provider.

There’s a rapid upsurge in retirees accessing the Home Equity Access Scheme (HEAS). The scheme allows all retirees (and not just those on an Age Pension) to access the wealth in their homes in the form of a government loan.

This loan is paid in fortnightly instalments, or a twice-yearly lump sum up to the rate of 150% of a full Age Pension.

Seniors with insufficient retirement savings can unlock a portion of their home wealth to access income and/or capital to provide more flexibility and choice in their later years.

A Household Loan is often more suited to covering some of the major components of long-term retirement – refinancing the bank mortgage, renovating the home for age-appropriate retirement, funding aged care, and potentially giving to children and grandchildren as the “Bank of Mum and Dad”.

Household Capital CEO and managing director, Josh Funder, said, “Although they may not realise it, Australian retirees are actually the wealthiest in the world.

“The vast majority do not wish to downsize, they would much rather prefer to stay in their own homes.

“In the past two years, nearly 65% of Household Capital’s customers have accessed their home wealth to draw additional income or refinance existing home loans – meeting the challenges of rising cost of living and interest rates.”

For more information:

Download the free e-guide 6 Ways to Use Your Home Equity.

Or use Household Capital’s Home Equity Calculator to calculate the equity in your home.

Prefer to speak to a real person?

Speak with one of Household Capital’s retirement specialists for a 15-minute no-obligation call on 1300 699 624. Or book a time that suits you to ask questions and discuss your needs. Schedule a call.