I am often asked what kind of lifestyle will the age pension give me? It’s interesting to look at this article from Mark Teale at Centrepoint Alliance. Mark looks at a question from one of their readers who asks ‘what kind of lifestyle did the age pension get you in 1909 when the age pension was first introduced?’
The amount of a full age pension in 2016 for a couple was $34,382 and just $104 in 1909.
Mark’s response makes for interesting reading and puts this into perspective.
Mark tracked down a copy of the findings from the ‘Inquiry into the Cost of Living in Australia, 1910-11’. The report was based on a survey of Australian families conducted over a full year from 1 July 1910. The Bureau of Census and Statistics distributed 1500 booklets to Australian households, inviting participants to keep a record of their weekly income and expenses for a full 52 week period.
What Mark found was, that as a percentage of the average weekly income for a family, the full Age Pension for a couple received 24% of the average in 2016 compared to 22% in 1910.
As a percentage of average living expenses however it is significantly different with the age pension in 1910 covering 50% of living expenses compared to 98.6% in 2016 for a modest lifestyle budget (based on the AFSA model).
According to the Association of Superannuation Funds Australia:
“A modest retirement lifestyle is considered better than the Age Pension, but still only able to afford fairly basic activities.
A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.
Both budgets assume that the retirees own their own home outright and are relatively healthy.”
And while it is comforting to note that a full age pensioner is proportionately better in 2016 than in 1910, it is important to remember that everyone’s retirement lifestyle is different and what is considered comfortable for one, might be modest for another.
If you would like to know more about the age pension and planning for retirement based on your lifestyle then please contact me firstname.lastname@example.org.