Renting or owning in retirement: how housing status affects the Age Pension and superannuation

Housing status does not change a person's superannuation balance directly, but it materially affects retirement income, primarily through Age Pension means testing and through the ongoing cost of maintaining a household once regular income from employment ends. The two paths, ownership and renting, are treated differently under Australia's retirement income system, and the practical difference in outcomes can be substantial.

The Assets Test and the family home

Under the Age Pension Assets Test, a person's principal home is not counted as an assessable asset, regardless of its value. This exemption applies only to the home a person actually lives in; investment properties and any other real estate are assessed at market value, net of any outstanding debt secured against them.

Because the home is exempt, homeowners face a lower Assets Test threshold than non-homeowners, who are given a higher allowance to account for not holding this exempt asset. From 1 July 2026, a single homeowner can hold assessable assets of up to $333,000 and still receive the full Age Pension, reducing to nil once assessable assets exceed $733,500. A single non-homeowner can hold up to $600,000 and still receive the full pension, with the part pension cutting out at $1,000,500. For homeowner couples the equivalent full pension threshold is $499,000 combined, cutting out at $1,102,500; for non-homeowner couples the figures are $766,000 and $1,369,500. These thresholds are reviewed and indexed several times a year, so current figures should always be confirmed at the time any decision is made.

The Income Test and deeming

Homeownership status has no bearing on how superannuation or other financial assets are assessed under the Income Test. Once a person reaches Age Pension age, their superannuation, whether or not it has moved into pension phase, along with other financial assets such as bank accounts, shares and managed funds, is subject to deeming. Centrelink assumes a set rate of return on these assets rather than using actual earnings, currently 1.25 per cent on the first $66,800 of financial assets for a single person, or $110,600 combined for a couple, and 3.25 per cent on amounts above that. This deemed income is assessed against the Income Test free area, currently $226 a fortnight for a single person and $396 a fortnight combined for a couple, with the pension reducing once income exceeds that level. None of this changes according to whether the person owns their home.

Commonwealth Rent Assistance

Renters who receive the Age Pension, or certain other income support payments, and who pay private rent above a minimum threshold may be eligible for Commonwealth Rent Assistance, a supplementary payment added to their pension. The maximum rate for a single person without dependants currently sits at $215.40 a fortnight, calculated at 75 cents for every dollar of rent paid above the threshold, up to that cap. Rent Assistance is intended to offset part of the cost of renting rather than cover it in full, and the maximum rate has not kept pace with rent increases in most capital cities in recent years.

Retirement savings targets by housing status

Independent research from Super Consumers Australia, published as its 2026 Retirement Savings Targets, estimates that a single retiree who owns their home outright needs approximately $322,000 in superannuation to sustain what the organisation terms a medium level of spending, broadly the comfortable-equivalent benchmark, to age 90, taking into account the Age Pension. This equates to a targeted annual retirement income of approximately $44,000 for a single homeowner, funded jointly through superannuation and the Age Pension. For a couple who own their home, the equivalent figures are approximately $432,000 in combined superannuation for a combined annual income of $64,000.

A single retiree who rents needs approximately $659,000 in superannuation to achieve the same standard of living, once ongoing rental costs and the partial offset from Rent Assistance are factored in; for a renting couple, the equivalent figure is approximately $786,000 combined. The gap largely reflects the fact that rent continues indefinitely in retirement, while home ownership costs, principally council rates, insurance and maintenance, tend to be lower and more predictable than market rent.

The downsizer contribution and other options for owners

Homeowners aged 55 or over who sell a home they or their spouse have owned for at least ten years can make a downsizer contribution of up to $300,000 each, or $600,000 combined for a couple, from the sale proceeds into superannuation. The contribution must be made within 90 days of settlement, sits outside the normal concessional and non-concessional contribution caps, and is not subject to a total superannuation balance test, although it does count toward the Transfer Balance Cap once moved into pension phase. Homeowners can also access equity in their property without selling, through the Home Equity Access Scheme, a government loan secured against Australian real estate, currently charged at 3.95 per cent per annum compounding fortnightly, with combined pension and loan payments capped at 150 per cent of the maximum pension rate and a no negative equity guarantee attached.

Practical considerations beyond the means tests

Beyond the numbers, homeowners generally have greater security of tenure and more predictable ongoing costs, but carry responsibility for maintenance, rates and insurance, and may have reduced flexibility if their circumstances or preferred location change. Renters retain flexibility to relocate more easily and avoid maintenance and insurance costs, but face less certainty around future rent increases and lease renewal, particularly as private rental supply in many areas remains tight. Retirement villages and similar arrangements sit somewhere between the two, with their own means testing treatment that falls outside the standard Assets Test rules applying to private ownership.

The financial mechanics differ meaningfully between renting and owning in retirement, but neither path is treated as inherently preferable under the rules; each interacts with the means test system differently, and the right settings depend on a person's total asset position, income needs and personal circumstances. Working through how these rules apply to an individual situation is where a considered financial strategy adds the most value.