The Cost of Living in Retirement

29 June 2018

Heartland digs deeper to better understand how the current Aged Pension and Superannuation stacks up against the cost of living in Australia.

Australia has seen a significant increase in ageing population, with Australians aged over 65 increasing by 14% between 2013 and 2017. With this brings further people relying on the Aged Pension, aged care, and medical services in Australian society.

For many, relying solely on the Aged Pension is a reality, as 52% of Australians on government entitlements us this as their main income source. With superannuation only becoming mandatory for employers in 1992, the accumulative balance in your superannuation fund today may not be enough to maintain a comfortable lifestyle in retirement.

How much do you need to retire?

When measuring the type of lifestyle you’ll live in retirement, its common practice to either categorize people as living a comfortable lifestyle or a modest lifestyle. The Association of Superannuation Funds of Australia (ASFA) defines these as:

  • comfortable 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.
  • modest retirement lifestyle is considered better than the Age Pension, but still only able to afford fairly ‘basic’ activities.


They estimate the income required for each of these lifestyles in retirement to be:

The underlying assumption in these figures is that the retirees own their own home outright and are relatively healthy.

However, many are carrying debt into retirement.  For those households, paying out a mortgage in full is likely to take a big bite out of retirement savings, or the monthly repayments taking a significant portion of retirement income. This lowers expected lifestyle in retirement, and increases the likelihood of having to rely on the Aged pension as a main source of income now or in the future.

Debt combined with costs of living, such as increasing gas and electricity, can make it tough for you live the retirement you deserve. The only other option may be to sell the family home to make ends meet.

RELATED POST: Power and Gas Price Increases Placing a Strain on Pensioners

How Heartland can help

However, instead of selling the family home to repay this debt, you could apply for a reverse mortgage that will allow you to unlock home equity and access the cash needed to take away the financial pressures.

A reverse mortgage could allow you to refinance your debts in a lump sum to repay debt, plus a regular advance, cash reserve facility (similar to a ‘line of credit’), or a combination of all three. No regular repayments are required – interest is charged monthly to the loan, with the debt being repaid from the future sale of the property. You are also able to repay your reverse mortgage partially, or in full, at any time without paying penalty charges, adding further flexibility.

So why not use our Heartland Reverse Mortgage calculator to find out how much you might be able to borrow? Hassle free and easy to use, our reverse mortgage calculator can help you discover how much you could be eligible for.

If you are looking for further information, you can requst our free Reverse Mortgage Insights guide. Just simply click the button below to have the eBook sent directly to you.



 Information provided is accurate as at  26 June 2018 and may change from time to time