Why your Age Pension increase may not be enough

For many Australian retirees, the arrival of March brings a familiar milestone: the biannual indexation of the Age Pension. On 20 March 2026, many will see a welcome Centrelink senior pension increase, with single rates rising by $22.20 to $1,200.90 per fortnight, and couples seeing a combined increase of $33.40 to $1,810.40.

While any extra breathing room in the budget is a positive, the latest data suggests that this "increase" is struggling to keep its head above water. According to the ASFA retirement standard released on 24 February 2026, the cost of living for seniors is rising at a rate that far outpaces general inflation and government supplements.

The Association of Superannuation Funds of Australia (ASFA) has revealed that the cost of a comfortable retirement in Australia has reached an all-time high. For the first time in three years, the lump sum benchmarks required to fund your post-work years have been significantly revised upward.

To maintain a comfortable retirement income – one that allows for private health insurance, a reliable car, and regular holidays – homeowners retiring at age 67 now face a much higher bar.

These figures represent a sharp climb from previous years, with the required superannuation balances jumping from $595,000 to $630,000 for singles and from $690,000 to $730,000 for couples.

You might wonder why a pension increase doesn't solve the problem. The issue lies in what retirees are buying. While the general Consumer Price Index (CPI) rose 3.8% through late 2025, the specific categories where older Australians spend the most have seen much more aggressive price rises.

ASFA CEO Mary Delahunty notes that the ASFA comfortable retirement figures reflect “price movers” that hit retirees harder than the average worker:

• Electricity: up 21.5% (as energy subsidies expire)
• Coffee and tea: up 15.3%
• Fresh food: up 4.2% to 15%
• Domestic travel: up 9.6%
• Medical and hospital services: up 4.3%

When the price of essential utilities, fresh food and healthcare rise faster than the Age Pension, the gap must be filled by your own savings. This places a much heavier burden on superannuation retirement planning and can challenge your financial security.

Adding to the pressure, the Minister for Social Services recently announced a ‘normalisation’ of deeming rates effective 20 March 2026. This is the second increase since the pandemic-era freeze ended.

The new deeming rates are:

• Lower rate: increases from 0.75% to 1.25%
• Upper rate: increases from 2.75% to 3.25%

This technical change means many retirees may actually see a reduction in their Age Pension payment because the government assumes your financial assets are earning more income. Consequently, more of your daily budget must be drawn from your personal retirement savings rather than Centrelink.

If you are currently retired or approaching age 67, these updates are a signal to review your retirement planning. Relying solely on the safety net of the Age Pension is increasingly becoming a recipe for a ‘modest’ lifestyle rather than a comfortable one.

A modest retirement – which covers only the basics with very little room for leisure – now requires a lump sum of $110,000 for singles and $120,000 for couples. While the comfortable retirement Australia aspires to is still achievable, it requires a more proactive approach to managing your superannuation balances.

Australians aged 60 and over now collectively hold $3 trillion in home equity. This figure, highlighted in the Deloitte 2026 Australian Reverse Mortgage Survey, underscores that for the vast majority of Australian retirees, the family home is their single largest financial asset, often far exceeding their superannuation balance. Of that $3 trillion in total equity, it is estimated that $600 billion could be safely ‘unlocked’ using a reverse mortgage.

Having enough money to fund a comfortable retirement is a challenge faced by thousands of Australians. A comfortable retirement is about more than just surviving; it’s about the freedom to enjoy the fruits of your working life.

At Household Capital, we’ve walked this path with thousands of people just like you: homeowners who love their local community and have no intention of leaving, but want the financial latitude to enjoy it. To ensure your comfortable retirement, one with financial security, you could join a growing community of retirees who have put the wealth in their home to work.

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