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$1.5 million to be self funded

The complex indexation of Age Pensions sees them play catch-up when wages outpace prices as they have done recently. The September increase in Single Person Age Pension to $13,314pa puts it 4.5%pa ahead of the figure 5 years ago. Over the same period CPI rose of 2.9%pa and wages 4.7%pa. The age pension rise has beaten all categories of the CPI over the 5 years except Health (5.8%pa) and Education (5.9%pa).

The age pension cuts out when self funded income reaches $36,992pa for Single people and $75,262pa for married couples. If you wanted to receive these levels of income and avoid any claim on the government for age pension, FinDem estimates you would need investments of about $1.5 million as a married couple. This is based on current long term bond rates, average CPI inflation rate over the past 10 years and average life expectancy from age 65.

Posted Sunday, 8 October 2006

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