The costs associated with an ageing population in Australia are putting increasing pressure on the fiscal resources of the government. This pressure will intensify as the proportion of elderly doubles over the next few decades. Under this increasing fiscal pressure, the government will be increasingly looking to individuals to provide for themselves.

This paper considers what capacity older Australians have to provide financially for themselves. In this paper Simon Kelly finds that if the traditional measure of wellbeing - incomes - is used, then they have very little capacity to contribute to the cost of their retirement. Almost all of those currently aged 65 and over rely almost entirely on the government-funded Age Pension. Despite the modest level of the pension (indexed at one-quarter of average weekly earnings), only 17% of current retirees have private income that matches or exceeds the pension.

Taking a broader economic view - including wealth - provides a very different perspective. Those aged 65 and over currently have an estimated 22 per cent share of total household wealth and this proportion is likely to increase to 47 per cent by 2031. By including this wealth in the evaluation of capacity to contribute to the costs of retirement, it appears there is considerable scope for self-provision.