Think there’ll be no age pension when you retire? Think again

You have reached your maximum number of saved items.

Remove items from your saved list to add more.

Every time I talk about the age pension, someone pipes up on social media and tells me that it won’t be there by the time they retire. Clearly they aren’t reading the same papers I am.

Usually this is someone in their 40s or 50s who’s spent most of their working life being told that our population is ageing and there won’t be enough taxpayers to fund everyone as we get older. The fear they quote relentlessly is that we’d all better build up our super because one day the government is going to run out of money – thanks to the ageing population.

The 2026 Intergenerational Report challenges persistent myths people tell themselves about retirement.Getty ImagesThis week, the Treasury published the 2026 Intergenerational Report, its best attempt to look 40 years into Australia’s future. There are some fascinating numbers in it for those heading towards a retirement in the next 10 to 20 years.

Of course, no one really knows what Australia will look like in 2066, which is where the report’s projections take us. Governments will come and go, policies will change, and sharemarkets will rise and fall, but the report still challenges some of the most persistent myths that people tell themselves about retirement. Here are five worth putting to bed today.

If I had a dollar for every 50-something who has said this to me, I could probably fund my own retirement.

“There won’t be a pension when we get there.”

“We’re going to have to fund the whole thing ourselves because the ageing population will send our country broke.”

“My parents got the pension, but our generation won’t.”

I understand where the fear comes from. We’re constantly told that Australia and the world’s populations are getting older, and we’re living longer. We know there will be fewer working-age people paying tax for every older Australian. It isn’t a huge leap from there to assume that eventually the government will simply decide that the age pension is unaffordable. But that’s not the future our Treasury has laid out in the report.

The number of Australians over the age pension age of 67 is expected to almost double to about 9 million by 2066. And while fewer of them are expected to receive government income support, Treasury still predicts that 52 per cent of older Australians will receive a pension or other income support payment. That compares with 66 per cent last year.

So there’s no projection that the pension disappears. The more interesting story is that fewer of us are expected to need it, as more Aussies arrive at retirement with a meaningful amount of super.

Every time I hear this, my radar goes off. For some reason, it’s become accepted wisdom: the Baby Boomers are retiring, Generation X is following behind. We’re all inconveniently refusing to die as early as previous generations did, and eventually there will be this enormous army of retirees supported by a relatively smaller group of workers. So, surely, the age pension bills will explode.

Except that’s not what Treasury projects in the report.

We’re going to have almost twice as many Aussies over age pension age, yet spending on age and service pensions is projected to fall from 2.3 per cent of GDP last year to 1.8 per cent in 2065-66.

There will be plenty of other costs associated with an ageing population, particularly health and aged care. But despite having millions more people old enough to receive it, our country is projected to spend a smaller share on the age pension than we do today.

That’s what a means-tested age pension, combined with more than three decades of compulsory superannuation reducing our reliance on it, is starting to achieve.

This is another conclusion that people jump to when they hear that Australia is ageing. Surely the answer will be to keep pushing retirement later and later?

But that’s not quite the picture the report paints. The report doesn’t forecast some great march towards working until we’re 70. What it does show, however, is that older Australians are already participating in the workforce at much higher rates than previous generations did, particularly women. And it points out that there are more opportunities to continue paid work if you choose, partly because of improving health and more jobs that are less demanding physically.

I also think we need to talk more about how that’s happening. Working longer doesn’t necessarily mean staying in the same full-time job until you drop. For today’s 50-somethings, it might mean dropping to four days a week, or changing careers. Maybe they’ll take a break, then return to the workforce, or use their super to make a more gradual transition out of work.

Retirement might become less of a date and more of a decade.

Can we please retire the stigma around getting the age pension?

You can be entirely self-funded at 62, receive nothing from the government at 67, then qualify for a part age pension at 75 as you spend down your assets. And plenty of Australians will have super and receive some age pension at the same time.

Retirement income can really be a moving combination of super, the age pension, savings, investments and even a bit of work. And it will change as you age.

The report expects about half of older Australians to receive some government income support in 2066, even as super balances become much larger than they are today.

We are expecting to live both longer and, on average, healthier lives. But that doesn’t mean that every extra year of our lives is another year of golfing, travel and looking after the grandkids. The report predicts that the number of Australians over 85 will triple by 2066, putting real pressure on health and aged care services.

For those of us in our 50s, that’s also a useful reminder not to plan our retirement purely around the money fears we have. The risk isn’t only that you run out of money. It’s that your healthy years run out while you’re still saving up to use them.

Bec Wilson is author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.

You have reached your maximum number of saved items.

Remove items from your saved list to add more.