The Meeting Place

Too many Australians relying on pension to fund retirement

Don't count on the Age Pension as a retirement plan, says Wealth Within chief analyst Dale Gillham, who says too many people will look to the pension to fund their retirement even though it is only meant to be a safety net.

Mr Gillham says the government pension was the main source of income for around 50 per cent of retirees.

“So, what exactly are Australian’s planning for if they continually end up in this situation?” he told Money Management.

“On a good note, 34 per cent indicated they wanted to pay down debt or become debt free while 32 per cent indicated their goal was to get their finances in order.

“While the survey included investors from all ages, one figure that was quite interesting, but not surprising, was that only 12 per cent said their goal was to plan for retirement, which explains why so many Australians are in debt and on a government pension."

“Retiring debt free and on a comfortable income is very achievable for anyone with a little dedication and planning.”

What do you think of Mr Gillham's comments?


Yep, yep and yep to Gilham. We know we gonna get to the end of the road one day, two choices are open, make a booking with your favourite undertaker for early occupancy or prepare to retire in style by having a game plan.

I'm a self funded retiree, own everything and holiday regularly, I do not draw a part pension.

I find it interesting that when you here someone say you can't live on a pension they.are the.ones trying to sell investment strategies.

We spend less than we would take as a pension most years yet we live very comfortably, a good part of the reason for this is that we planned for retirement.

We had a house built that was designed to help keep our living costs down.  We built on acreage so that we have ample land to grow fruit and vegetables, we had water tanks installed to keep water rates down, installed a bio cycle water treatment plant for the same reason and put in solar hot water and a 3 kWh solar power system. A few thousand dollars spent wisely at the right time can be a better investment than risking it on the share market.   Especially when you take into account deeming rates and Asset Tests.

Of course it is not the only strategy, but is part of the strategy that is often overlooked.  Instead of going on a cruise to meet asset test conditions improving or reducing your cost of living expenses  may prove to be a better option.



I'm retired, self-funded as I'm only 59 and we too live comfortably on around $38,000 py which is only just above the pension.

We planned our path forward at $50,000 py, that's including the pension when we are able. We are very happy with our life, new house, nice car and still have private health for hospital. If things got tighter we could easily drop the private health ($3,500) and be well under the pension.


So yes it can be done, harder though if there's only one of us.

ex PS - that is a perfect solution if you want to spend your remaining years pottering around a block of land planting vegetables, running a hen house and what not. Not everyone's cup of tea and certainly not ours. Grew up on a plot like that, always just having enough but hardly any luxuries; suited Mum and Dad but I would never want that life for myself. Good for you if you thrive on it. For me, low maintenance place and a part pension.

Mariner, you get it, it's all about how YOU choosecto live your life that counts, not what someone else tells you you should want.

We don't live a life of austerity we have had two one month holidays in Europe so far and are planning more in the future, we garden because we like gardening, most of the produce goes to family and friends.  I just never got growing flowers.

I worked hard and long but I also looked after 2 of my family members at home to stop them having to go into care --my Mother and my Husband, at different times -- so that took a fair bit of working time from me too, also used a lot of my saved money -- but I would not have had it any other way.  

I own everything I have including my home and owe nothing on anything.   I am on the OAP

Good for you planB, Mariner. well done. But if you are single  have a good car,no debt yes you can live very well on the pension,  Untill you need a new car, lounge suite .or any thing for that matter.  just saying.

Some good comments here however worth noting that some life events can be unfortunate, be unlucky and put a large dent in savings.  Also in order to get a return on savings with today's interest rates you would need nearly $4 million to get similar to the old aged pension (safely) !!

exPS We have done the same it is the only way to go.My one aim in life is to stay away from C/Link.

Way to go if being a C/L customer is a bother, floss. I like the health card and the discounts a pension card brings.

So wise to endeavour to own your own home prior to retirement and good luck to those that have been able to accumulate sufficient to remain self funded in their twilight years.  However, in saying that, life's circumstances for some do not give them the chance to save millions for retirement years and the age pension is usually sufficient to have a pleasant, simple old age if you have been able to reach that without any debt.

Good luck to everyone reaching their senior years and wish you every opportunity to have a safe roof over your head and to enjoy life's simple pleasures, good medical treatment if necessary and a little to continue to help your family if and when in need.  So much pleasure in being able to "spoil" your offspring and their children just a little sometimes.

Really nice to have a cup that is half full and not half empty in your twilight years.


Very well put, Koro. You seem to be a happy person and delighted to have your own roof. Quite an achievement these days.

good on you Koro, you hit the nail on the head. simlpe life pleasures is the key.

The fact is that it is not everyone who can accumulate sufficient funds to be self funding their retirement. Not everyone inherits a tidy sum from their parents that provides the base for that accumulation.

Reading some of the claims made by financial advice companies must be directed at those who must be well heeled with the aim of having a retirement income of $80,000+ per annum.

Provided one is fortunate to retire free of debt with a house in good condition, and of a suitable size, along with a fairly new car, having a long life expectancy, then it is possible to retire on the OAP and live a comfortable quiet life. If you want to be cruising the oceans every year and dining out while home every couple of days then you will need a lot more money.

The OAP was originally set up many years ago with contributions being made in addition to tax. Robt. Menzies took all the funds that had been contributed and took them into consolidated revenue and stated that in future OAPs would be funded from taxation receipts. Since then of course the LNP have continued to reduce taxation on ideological grounds which is really a betrayal of Menzies intention. 

Under Fraser every retiree I worked with before they turned 65 got the age pension as well as the company super and so it might not have been Robert Menzies. Means testing from memory came in after the Fraser Administration lost in 1983 when compulsory super was being brought in. Keating meant to have super to help retirees not to replace the age pension. Starting work in the 60s everyone was expecting an age pension at 65 years of age; women at the time at 60, then 62 later on.

Menzies merged the social services contribution and income tax into a single levy in 1950. There was no direct link between contributions and benefits and the pension and it was essentially an accounting exercise. Fraser and Lynch put an end to the farce in 1976, abolished the National Welfare Fund and transferred its $469.9M balance to CRF. Hawke repealed the National Welfare Fund legislation in 1985.

Means test was removed for over 75 by Whitlam in 1973, and 70-74 in 1975. Fraser abolished it in 1976. It was reintroduced for over 70s by Hawke in 1983.

Mr Gillham has a point in so far as people like him are concerned. As a Chief Analyst I would probably have had enough money to salt away to live independently in old age. That said what is the point accumulating funds for the old age when after all you might get about the same income or even less from them than the blokes get from the age pension while they had a good life of fun and frivolity. The more you save the less you get on the pension and for ordinary people this saving for old age is just a stupidity as there is no reward. At least give the SFRs the pension card and keep the money if they do not need it. But depriving them of a pension as well as the health and discount card is too much. I have no degree but I always had a job but not one where one could accumulate $100'000s to use in old age. Managed some, hence the part pension, and really I am happy with that. Hope it works out for Mr Gillham in his retirement - but I would like to hear from an ordinary worker on how he/she managed to heap up enough to live without a pension.

Mariner raises a good point – there are many who can work throughout their lifetimes but not "accumulate $100'000s to use in old age". For most the pension was intended to be available and supplemented from compulsory superannuation savings. From memory it was anticipated that workers would require a part pension until 2040 or thereabouts. 


As I understand it when the Aged Pension was introduced the life expectancy of people was considerably less than it is in 2020...

Have read the life expectancy for Australian men in the first decade of the 20th century was something like 56 or thereabouts.  Hence it's very likely governments of the time thought Australians would only be on the aged pension for a short period of time before they died.  

But of course there are many and varied reasons why people may find themselves reliant on an aged pension.  For instance many older women with interrupted 'paid work' histories caused by childbirth, child raising and other familial responsibilities - which until fairly recent times traditionally fell on their shoulders was such a reason.

 I stress the notion of 'paid work' because in home, unpaid work such as rearing children and caring for the disabled and elderly etc. etc. is complex, labour intensive, and vitally important but largely invisible.  Thus the opportunity to accrue significant superannuation funds for retirement is significantly curtailed.  

Likewise no surprise at all that one of the fastest growing poverty and homelessness demographics are women over 60 years of age.

Similarly some people have no inheritance to rely on as others do.  

The point I'm making is that it is simplistic to say people should have planned and saved for 20 to 30 years of self funded retirement (which is what it can be for baby boomers) when there are all sorts of variables that impact on and thwart a person's capacity to do so.  

I'm not on an aged pension at the moment but unless I stumble across some major financial windfall coming my way, darn certain depending on how long I 'keep on keeping on' I'll be lining up at Centrelink at some stage to sign on for it and equally darn sure I won't be feeling guilty for doing so, given me and mine have paid our fair share of tax over the years.