Retirement Income and Living Costs in the United States and Australia

Comparing retirement in the United States and Australia is not simply a matter of asking how much someone receives each month. Retirement income may come from government arrangements, pensions and savings accumulated through work, investments, and employment after the conventional retirement age. Even when two retirees have similar income on paper, their spending on health care and housing can leave them with very different amounts to live on.

This comparison draws primarily on statistics published by government agencies and established research organisations. It distinguishes the share of older people covered by each arrangement from the amounts actually paid, and reports averages and medians where reliable figures are available. Four concepts must not be confused: being eligible for a benefit, owning a retirement account, actually receiving retirement income, and relying on that income as one's principal source of support. The two countries also use different age groups, reference periods and statistical definitions. Where comparable averages or medians have not been published, it would be misleading to fill the gap with a maximum statutory payment or an assumed withdrawal rate.

The first component is the public retirement pension. In the US, Social Security retirement benefits are social insurance built on earnings and payroll-tax records, not a uniform payment automatically available to everyone at 67. Eligibility on one's own record generally requires 40 work credits, roughly ten years of covered employment. Benefits may start before 67 or be deferred until 70, with permanent adjustments to the monthly amount. For people born in 1960 or later, 67 is the full retirement age, not the earliest age of entitlement. Some people qualify through a spouse or deceased spouse. Owning a home or investments does not ordinarily disqualify someone from a Social Security retirement benefit they have earned. [1][2]

According to the Social Security Administration, approximately 86.6% of the US population aged 65 and over was receiving some form of Social Security Old-Age, Survivors and Disability Insurance (OASDI) benefit in December 2025. This is nearly nine in ten older Americans, but not all receive retirement benefits on their own employment record. Some eligible people have delayed claiming, while others have insufficient work credits. [1]

Among retired workers actually receiving benefits on their own record in December 2025, the mean monthly payment was US$2,071.30 and the median was US$1,991.90. Those figures correspond to approximately US$24,856 and US$23,903 a year respectively. They describe benefit recipients, not the average income of every person over 65, and exclude 401(k) and other private retirement income. Benefits received a general 2.8% cost-of-living adjustment in 2026. Applying that increase mechanically to the December 2025 distribution would produce a mean of about US$2,129 and a median of about US$2,048 per month, but these are calculations, not separately observed 2026 statistics. [2][3]

Australia's Age Pension works differently. It is a tax-funded, means-tested payment, determined by income, assets and other eligibility criteria. Turning 67 satisfies the age requirement but does not itself guarantee payment: residency rules also apply. A person's principal home is generally excluded from the Age Pension assets test, although homeowner status affects the applicable thresholds. Superannuation and other financial assets can affect both income and assets testing. Retirees with substantial assets may receive a part pension or none at all. [4][5]

Data from the Australian Institute of Health and Welfare (AIHW) for March 2025 show that 62% of Australians aged 65 or older received some form of income support, and approximately 56% of that entire age group — around 2.7 million people — received the Age Pension. Of Age Pension recipients, about 67% were on the full rate and 33% on a part rate. The 56% figure is an observed receipt rate, not a measure of how many are eligible to retire. Its denominator includes 65- and 66-year-olds who have not yet reached the Age Pension age. [4]

From 20 September 2026, the maximum standard Age Pension for a single Australian resident, including regular supplements, is A$1,237.70 per fortnight — approximately A$2,682 a month or A$32,180 a year. For a couple living together where both qualify, the maximum is A$933 per person per fortnight, or approximately A$4,043 per month and A$48,516 a year combined. These are full-rate statutory ceilings, not the average or median amounts actually received. The accessible national releases do not provide an Australia-wide mean and median for all Age Pension recipients on a directly comparable basis with the US retired-worker figures. Substituting the full entitlement for an average would overstate many recipients' income. [6]

The institutional distinction matters. Social Security reaches a high proportion of older Americans, but an individual's payment depends substantially on their earnings and claiming history. Australia's Age Pension is more explicitly directed towards people with limited income and assets, and the full-rate payment is comparatively standardised. This does not mean Australia has eliminated old-age poverty. Renters, older people living alone and those without sufficient residency history can still face considerable hardship.

The second component is employer pensions and private retirement savings. A 401(k) is a retirement savings plan, not health insurance. Workers contribute from their earnings and employers may offer matching contributions, but American employers do not face an Australian-style universal obligation to pay a standard percentage into a 401(k). Individual Retirement Accounts (IRAs) are separate personal arrangements, while traditional defined-benefit employer pensions promise benefits under another set of rules. One person might have several of these assets; another may have none.

The Federal Reserve's report on household economic wellbeing in 2025, released in 2026, found that among Americans aged 65 and over, 62% held tax-preferred retirement savings accounts such as 401(k)s or IRAs, 52% had some entitlement under an employer defined-benefit pension scheme, and 78% had at least one of these forms of retirement provision. There is overlap between the groups, so 62% and 52% cannot be added together. More importantly, these figures describe ownership or entitlements, not cash received during the year. [7]

For actual payments, a US Census Bureau analysis of 2022 found that approximately 48% of adults aged 65 and over received retirement income outside Social Security and other government assistance. Around 26% received traditional pension income, 16% received payments from an IRA or Keogh account, and 10% withdrew income from employer retirement savings plans such as 401(k)s. These categories overlap. Among those who did receive such additional retirement income, the annual median was US$17,160, or US$1,430 a month. The summary report does not provide a mean for precisely this population and income definition. An account withdrawal can also be concentrated in a particular year rather than paid as a regular monthly pension. [8]

Australia's superannuation system is comparable to a 401(k) in being based on accumulated retirement assets, but differs in the rules governing employer contributions. The statutory Superannuation Guarantee rose to 12% of ordinary time earnings in July 2025 for eligible employees. This is a legal obligation covering qualifying employment, not an optional employer benefit. Employees can also make additional voluntary contributions subject to relevant rules. Super is an accumulated personal retirement asset, not another universal government pension payable to everyone at 67. [9]

The Australian Bureau of Statistics' 2024–25 retirement survey found that among retired people aged 45 and over, approximately 28% identified superannuation as their main source of income. About 48% of retired men and 34% of retired women reported receiving some income from super; around 35% of men and 23% of women named it as their main source. The Australian sample covers retirees aged 45 and over, whereas the US Census figure of 48% covers all adults aged 65 and over. These should not be read as directly comparable coverage rates. [10]

Nor is a super balance the same as annual retirement income. Figures published by the Association of Superannuation Funds of Australia (ASFA), based on June 2023 account data, show that among account holders aged 65–69, the average super balance was approximately A$420,934 and the median about A$208,143. The large difference indicates an uneven distribution. These are not averages for every Australian in that age group, and they are not annual incomes. Some people have transferred money into pension products, withdrawn large amounts or never held an account. Multiplying a balance by an assumed drawdown percentage would not produce a defensible national median retirement income. [11]

This creates different strengths and limitations. Americans with long careers, good workplace benefits and substantial retirement savings may draw income from Social Security, traditional pensions and 401(k) accounts. Australia's compulsory employer contributions provide a more systematic basis for accumulation across the workforce. In both countries, however, the eventual balance depends on pay, interruptions to work, returns, fees and retirement timing. Neither system eliminates inequalities in retirement wealth.

Looking at total retirement income requires particular care. The US Social Security median of about US$1,992 a month comes from retired-worker recipients in December 2025. The median of roughly US$1,430 in supplementary retirement income comes from a different group — those who actually received it in 2022. Adding these medians together does not establish an overall median of US$3,422 for American retirees. The populations, years and distributions are different.

Two hypothetical cash-flow examples make the point without pretending to describe a national average. A retired American receiving US$2,000 per month in Social Security and no other pension income would receive around US$24,000 a year from that source. Someone receiving the same Social Security payment plus US$1,400 a month from an employer or private retirement arrangement would receive US$3,400 a month, or about US$40,800 a year. Neither example includes earnings, investments or other household income. [2][8]

Australia needs the same discipline. A single retiree entitled to the full 2026 Age Pension would receive around A$2,682 a month in cash benefits. Someone with super could also draw an income from those assets, but those assets and deemed income can reduce the Age Pension under the means test. It is therefore wrong to add an arbitrary super pension to the maximum Age Pension and call the result an Australian average. A retiree with sufficient super may receive no Age Pension at all, and their cash flow will reflect the size of their savings and how they choose or are required to draw them down. [5][6]

For a broader comparison of incomes, the OECD's Pensions at a Glance 2025 uses an internationally structured measure. It reports that the mean disposable income of Americans aged 65 and over was approximately 94.5% of the mean for their country's whole population. In Australia the corresponding figure was 73.8%. These are measures relative to each country's own population, not absolute currency amounts. One cannot divide 94.5 by 73.8 and claim American retirees receive that multiple of Australian retirees' income. The underlying US observations largely relate to 2023, and the Australian observations to 2020, so the comparison is also not an exact snapshot of October 2026. [12]

Under that OECD measure, older Americans have a higher mean relative disposable income. That fact does not settle the question of financial security for low-income older people, nor does it tell us what remains after housing and health costs. Both countries face meaningful old-age relative poverty risks. The data do not support the claim that Australia has abolished retirement poverty, nor that American retirees are necessarily worse off in average income terms. [12]

Health care is one of the largest structural differences. Americans aged 65 and over generally rely on the federal Medicare programme, so it is not accurate to say that all retirees must buy comprehensive private health insurance. Yet Medicare is not free care without additional payments. Most qualifying beneficiaries pay no premium for Part A hospital insurance. For Part B medical and outpatient insurance, the standard 2026 premium is US$202.90 a month, or US$2,434.80 a year, with a US$283 annual deductible. Part D drug coverage, Medigap supplemental insurance and Medicare Advantage plans have their own rules and costs. Higher-income beneficiaries may pay more, while some people with low incomes receive help through Medicaid or other assistance. [13]

A KFF analysis using 2023 figures estimated mean annual out-of-pocket and premium spending by Medicare beneficiaries at roughly US$6,459, or about US$538 a month. That total includes relevant Medicare and supplementary insurance premiums as well as expenses not fully covered by insurance. The annual Part B premium should not simply be added again on top of the US$6,459 figure. The Medicare beneficiary group is also not identical to all Americans aged 65 and over, since some beneficiaries qualify earlier through disability. [14]

Australian Medicare provides publicly funded cover to eligible residents, including treatment as a public patient in a public hospital without direct hospital charges in qualifying circumstances. Bulk-billed GP and other covered appointments may likewise involve no direct payment. Australians do not begin paying an American-style fixed Part B monthly premium simply because they reach 67, although Medicare levy and other tax rules may apply to taxable income. But Australian Medicare does not make everything free. Specialist gap fees, private hospital treatment, dentistry, some medicines and aged-care services can still impose significant costs.

AIHW statistics for 2023–24 show average annual individual out-of-pocket health spending across Australians of all ages at approximately A$1,634, including about A$296 for dental treatment and A$265 for medical services, alongside medicines, hospital services and other costs. This is an all-ages per-person figure, not an average for Australians aged 65 and over. It cannot properly be divided into the KFF Medicare beneficiary figure to claim an exact US–Australia cost ratio for retired people. [15]

Even without perfectly aligned individual-spending statistics, the policy distinction is clear. Many American retirees face compulsory premiums for portions of their Medicare cover and a complex combination of deductibles and co-payments. Australia's public hospital and core Medicare arrangements generally offer stronger protection against direct charges for covered services. This comparative advantage does not remove Australian dental costs, waiting times, private-care fees or aged-care expenses.

Housing is the next continuing expense. Owning a home outright removes mortgage repayments but not the cost of holding it. Building insurance, maintenance, water and sewer charges, local government levies, and body-corporate or homeowners' association fees may continue for life. When comparing the US and Australia, recurring property taxes and council charges deserve particular attention.

In most of the United States, local governments levy annual property tax on owner-occupied homes. Assessment rules and exemptions vary by state, county and municipality. Tax Foundation figures using 2024 effective tax rates put New Jersey and Illinois at approximately 1.88% of home value, Texas at about 1.40%, California at around 0.70%, and Hawaii at about 0.29%. These effective rates measure tax paid relative to property value; they are not the formal rate for every individual house. As a simple illustration using an assumed effective rate of 0.9%, a US$500,000 home might incur US$4,500 in annual property tax. At 1.88%, the illustrative tax would be US$9,400. The bill actually paid may differ substantially because of local assessments, homestead relief and older-person exemptions. [16]

In much of Australia, a qualifying owner-occupied principal residence is exempt from the state or territory land tax imposed on investment property. It is not, however, exempt from council rates and similar levies. In Canberra, the ACT Government collects General Rates. The bases of assessment and charging formulas differ between Australian jurisdictions, so 'America has property tax and Australia has none' is incorrect. [17]

An ACT example helps quantify the distinction. For a standard detached residential property in 2026–27, General Rates comprise a fixed A$884 component plus a variable amount based on average unimproved land value (AUV). With an assumed AUV of A$400,000, General Rates would be around A$2,316 under that year's bands. Adding the A$458 Police, Fire and Emergency Services Levy and A$70 Safer Families Levy gives approximately A$2,844 a year before any applicable pensioner concessions. This is a worked example of a land-assessment formula, not a statistical average bill for retired Canberra homeowners and not the tax bill for a house whose entire market value is A$400,000. [17][18]

The two countries' figures cannot be compared simply by setting their nominal rates side by side. American property assessments commonly concern the value of both land and improvements, while ACT General Rates use an average unimproved land value. The example amounts are also denominated in US and Australian dollars, and the assumed property values are not equivalent. Comparing a genuinely similar home requires a specified locality, dwelling type, market value, assessment method and relevant concessions. Nevertheless, retirees in high-tax US jurisdictions can face a substantial and recurring annual property-tax bill. Australia's principal-home land-tax exemptions offer a distinct advantage, although council rates and fixed levies remain, and in some areas are not negligible. [16][17]

These findings are best read as separate comparisons, not an overall ranking. In the US, approximately 87% of people aged 65 and over receive some OASDI benefits; in Australia approximately 56% of those aged 65 and over receive the means-tested Age Pension, remembering that the Australian denominator includes people below its qualifying age of 67. The percentages alone cannot show which country's retirees are better protected. Benefit eligibility, other sources of income and the purpose of each scheme differ. [1][4]

In the design of a basic public income floor, the Australian Age Pension directs a relatively standard full-rate payment to eligible people with limited means. American Social Security more closely reflects a person's career earnings and claiming age, so workers with high covered earnings can receive substantially more than those with limited earnings. America also has Supplemental Security Income and other assistance for eligible low-income people, while Australia provides concessions and supplements. Neither country's retirement welfare arrangements can be reduced to a single pension payment. [2][5][6]

For workplace retirement accumulation, the Australian system has the advantage of a broad statutory employer contribution requirement. America has multiple long-established tax-preferred accounts and pension arrangements that can produce substantial income for people with stable employment and savings, but access and accumulated wealth vary considerably. The fact that 78% of older Americans have some retirement account or defined-benefit entitlement does not mean 78% receive extra pension cash every year. Nor does Australia's 28% reliance on super as a main income source imply that the other 72% have no super. [7][10]

On the OECD's mean relative disposable-income measure, older Americans appear better placed compared with their country's overall population. This says nothing directly about how much cash an individual has after their own health and housing spending, and it does not erase differences in poverty and wealth distributions. [12]

In health care, Australia's publicly funded hospital and core medical system generally offers an advantage in reducing direct financial exposure, while American Medicare combines broad protection with premiums, deductibles and other out-of-pocket charges. Neither system offers every type of medical service without cost. In housing, qualifying Australian owner-occupied homes generally avoid state land tax but still incur rates and levies; American owner-occupiers usually face an annual property tax that can be substantial in certain states. In either country, remaining mortgage debt, insurance and maintenance can matter more than the tax rate by itself. [13][14][15][16][17]

The useful question, then, is not which country has the 'best' retirement system in the abstract. It is how many people actually receive each kind of income, how amounts are distributed rather than merely averaged, how many own their homes outright, what medical premiums and personal health bills they face, and how much of their income remains once unavoidable housing and health costs have been met. Putting those elements together gives a more meaningful basis for comparing retirement living standards without forcing a simplistic national winner.

Sources and statistical notes

[1] US Social Security Administration, OASDI recipients by state and county (2025)
https://www.ssa.gov/policy/docs/statcomps/oasdi_sc/2025/table01.html

[2] US Social Security Administration, Annual Statistical Supplement 2026, table 5.J6
https://www.ssa.gov/policy/docs/statcomps/supplement/2026/5j.html

[3] US Social Security Administration, 2026 cost-of-living adjustment
https://www.ssa.gov/news/en/cola/factsheets/2026.html

[4] Australian Institute of Health and Welfare, Income support for older Australians
https://www.aihw.gov.au/reports/australias-welfare/income-support-older-australians

[5] Services Australia, Age Pension income and assets tests
https://www.servicesaustralia.gov.au/income-test-for-age-pension?context=22526
https://www.servicesaustralia.gov.au/assets-test-for-age-pension?context=22526

[6] Australian Department of Social Services, Social Security Guide, Age Pension rates
https://guides.dss.gov.au/social-security-guide/5/1/8/10

[7] US Federal Reserve, Economic Well-Being of U.S. Households in 2025
https://www.federalreserve.gov/publications/2026-economic-well-being-of-us-households-in-2025-savings-investments.htm

[8] US Census Bureau, Retirement Income: 2022
https://www.census.gov/content/dam/Census/library/factsheets/2025/demo/p70fs-207.pdf

[9] Australian Taxation Office, Superannuation Guarantee
https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/supporting-your-small-business

[10] Australian Bureau of Statistics, Retirement and Retirement Intentions 2024–25
https://www.abs.gov.au/statistics/labour/employment-and-unemployment/retirement-and-retirement-intentions-australia/2024-25

[11] Association of Superannuation Funds of Australia, Account Balances Update (October 2025)
https://www.superannuation.asn.au/wp-content/uploads/2025/10/ASFA_Account_Balances_Update_Oct25.pdf

[12] OECD, Pensions at a Glance 2025, Incomes of older people
https://www.oecd.org/en/publications/pensions-at-a-glance-2025_e40274c1-en/full-report/incomes-of-older-people_24a65c56.html

[13] US Centers for Medicare & Medicaid Services, 2026 Part B premiums and deductibles
https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles

[14] KFF, Key Facts About Health Care Affordability for People With Medicare
https://www.kff.org/medicare/key-facts-about-health-care-affordability-for-people-with-medicare/

[15] Australian Institute of Health and Welfare, Health Expenditure Australia 2023–24
https://www.aihw.gov.au/reports/health-welfare-expenditure/health-expenditure-australia-2023-24/contents/spending-trends-by-source/non-government-sources

[16] Tax Foundation, Property Taxes by State and County, 2026
https://taxfoundation.org/data/all/state/property-taxes-by-state-county/

[17] ACT Revenue Office, Calculating Rates and About Rates
https://www.revenue.act.gov.au/rates-and-property-charges/rates/calculating-rates
https://www.revenue.act.gov.au/rates-and-property-charges/rates/about-rates

[18] ACT Revenue Office, Police, Fire and Emergency Services Levy, Safer Families Levy
https://www.revenue.act.gov.au/rates-and-property-charges/police-fire-and-emergency-services-levy
https://www.revenue.act.gov.au/rates-and-property-charges/safer-families-levy

All US amounts are in US dollars and all Australian amounts in Australian dollars. No exchange-rate conversion has been applied. The different reference years, age groups and income definitions must be considered when reading these statistics. Where a directly comparable mean or median was unavailable, no substitute figure has been presented as if it were observed data.