Last week, Mark’s blog (At what age do I qualify for an age pension?) focussed on the age we qualify to receive the age pension, and the fact it is progressively increasing from 65 to 67.
Following the publication of that article, a question arose from a reader of the blog, Scott.
Scott reflected on the fact the age pension was first introduced in 1909 and posed the question ‘what kind of lifestyle did the age pension get you in 1909?’
Not to be daunted by such a challenge, and with help from ‘Dr Google’, I managed to track down a copy of the findings from the ‘Inquiry into the Cost of Living in Australia, 1910-11’.
The report was based on a survey of Australian families conducted over a full year from 1 July 1910. The Bureau of Census and Statistics distributed 1500 booklets to Australian households, inviting participants to keep a record of their weekly income and expenses for a full 52 week period. Quite a daunting task!
At the end of the survey period, the books were to be returned for analysis.
Unfortunately, of the 1500 books distributed, only 222 were returned and of those, 10 were rejected due to being incomplete or having obvious inaccuracies.
So, how much did it cost to live in Australia in 1910?
Before we start, let’s look at the average weekly income for a family in 1910.
For the sake of this article, I have converted all figures to dollars (from pounds).
The maximum rate of age pension for each man and woman aged 65 or older was $1 per fortnight, each. So, for a couple that was $104 per year, combined.
The survey broke respondents down into income groups and family size; those with incomes of more than $400 per annum and those with less than $400. Families were also broken into groups with more than four members and less than four members.
In 1910, the average income for all households was $9.30 per week or $483 per annum. The age pension for a couple was $104 per annum which represented approximately 22% of the average family income.
Comparing the 1910 average to 2016, the average family income in 2016 was $145,400. The maximum age pension for a couple was $34,382 per annum. Therefore, in 2016, a couple on the age pension received the equivalent of almost 24% of the average family income. A small improvement over their 1910 counterparts.
But what happens when we compare this to the costs of living?
This is where things become a little more difficult as the 1910 data covers families which, on average comprises of more than 2 people. The average living costs of a family in 1910 was a little over $400 per annum. If we discount this by a rather arbitrary 50% to arrive at an approximate level of spending for a couple, the full rate of age pension for a couple in 1910 will only cover 50% of their living expenses.
For the 2016 comparison, I have used the ASFA modest lifestyle budget for a couple ($34,855).
Our 2016 couple will find their age pension covers 98.6% of their living costs.
So, what conclusions can we draw to answer Scott’s question?
Today’s age pensioners will certainly be better off financially, even where their age pension is the sole source of income, compared to their distant relatives from 1910.
Some other interesting facts include:
|% of total expenses|
|Fuel & Lighting||3.3%||8.7%|
Next time, when someone tells you how wonderful things were in the ‘good ole days’ at least you will be equipped to provide some trivial information in relation to their financial well-being.
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