In this guide
It’s often said that location is everything where property is concerned, but it also makes a big difference to how far your money stretches in retirement.
According to the Australian Bureau of Statistics (ABS), 67% of Australians live in a capital city. Better job prospects and education offerings are two major factors that attract working age adults and families to the city.
ABS statistics show median household incomes in mainland capital cities are all well above incomes in regional areas. For example, the median household income in Sydney in 2021 was $2,077 per week compared with popular retirement locations such as Byron Bay ($1,602 per week) and Coffs Harbour ($1,363). Similarly, Brisbane households earned substantially more ($1,849 per week) than those of the retirement mecca on the Sunshine Coast ($1,574).
Not only do city slickers earn more, they spend more due in part to their higher disposable incomes but also because of the higher cost of living in major capital cities. This has big implications once people retire and their focus shifts from wealth accumulation to drawing on their savings.
The desire for a cheaper and simpler lifestyle is undoubtedly a major motivation driving older Australians to make a sea or tree change. ABS figures show the proportion of people aged 55 and over is smaller in capital cities (26%) than in the rest of Australia (34%).
So when it comes to planning your retirement, where you live can be just as important as how you want to live and how much you need to save to afford it.
Shift to the regions
It seems the lure of country living was not a one-off phenomenon. The move from capital cities to regional Australia is tracking at levels reported at the height of COVID, and 16.4% above pre-pandemic levels, according to the June 2024 Commonwealth Bank/Regional Australia Institute Regional Movers Index.
In the 12 months to June 2024, 27% more Australians moved from capital cities to the regions than in the opposite directions.
The table below shows the top 5 regional hotspots by share of net internal migration.
| Sunshine Coast Qld | 14.1% |
| Greater Geelong Vic | 8.1% |
| Moorabool Vic | 5.4% |
| Lake Macquarie NSW | 4.8% |
| Gold Coast Qld | 4.2% |
Source: CommBank/RAI Regional Movers Index
The following table shows the top 5 regional hotspots by growth in net internal migration. As you can see, the NSW south coast is enjoying a surge in popularity.
| Bega Valley NSW | 314% |
| Eurobodalla NSW | 311% |
| Strathbogie Vic | 297% |
| Northam WA | 250% |
| Surf Coast Vic | 225% |
Source: CommBank/RAI Regional Movers Index
Regional variations in the cost of living
We all suspect intuitively that it’s cheaper to live in the country than the city. You can’t leave the house in a major capital city without paying for parking, road tolls or entertainment. Whereas in the country you’re hard-pressed to find a parking metre let alone an A-reserve seat.
And that’s before you factor in the cost of housing, rent or moving into aged care, which are more expensive in the city than the country and more expensive in some cities and suburbs than others.
The location effect is not limited to the urban/regional divide; the ‘latte’ dividing lines within capital cities can also have a big effect on retiree spending. For example, retirees in affluent suburbs such as Mosman in Sydney or Toorak in Melbourne typically spend more than their fellow citizens in Auburn or Reservoir.
Whether regional variations in spending are due to higher costs in affluent areas, higher incomes providing higher retirement savings and more expensive lifestyles, or a bit of both, is a moot point.
Even so, some goods and services are more expensive in more remote areas due to the higher cost of transportation and service delivery.
That said, it is undoubtedly easier to live on a constrained income in some locations than others. Not surprisingly, the 2021 Census found median incomes in capital cities were higher than the rest of the state. For example, the median weekly Sydney income was $839 compared with $696 for the rest of the state. The pattern was similar for Melbourne ($801) and the rest of Victoria ($691), Brisbane ($838) and the rest of Queensland ($738), and most states and territories except Western Australia where there was little difference between Perth and the rest.
Popular retirement locations
Once people retire and have more freedom to relocate, many of them vote with their feet and head for the hills, or the coast. The choice of location often depends, at least in part, on finances.
While Age Pensioners flock to quiet coastal towns, self-funded retirees settle in a wider range of beach and bush locations, or stay put in wealthy city enclaves, as you can see in the tables below.
Table 1 – Areas with the highest proportion of non-pensioners (age 65+)
| District | Non-pensioners population % | Age Pensioners population % |
|---|---|---|
| Point Lonsdale – Queenscliff Vic | 28.6% | 13.1% |
| Flinders Vic | 26.6% | 5.7% |
| Tea Gardens-Hawks Nest, NSW | 25.5% | 24.9% |
| Yarralumla ACT | 25.1% | 2.8% |
| Main Beach Qld | 24.9% | 8.8% |
| Bowral NSW | 24.3% | 13.2% |
| Toorak Vic | 24.2% | 2.7% |
| Castle Hill East NSW | 23.7% | 11.7% |
| Noosa Heads Qld | 22.7% | 8.3% |
| Lorne-Anglesea Vic | 22.6% | 8.3% |
Source: ABS
Table 2 – Areas with the highest proportion of Age Pensioners
| District | Age Pensioners population % | Non-pensioners population % |
|---|---|---|
| Tuncurry NSW | 26.5% | 18.3% |
| Tea Gardens-Hawks Nest NSW | 24.9% | 25.5% |
| Bribie Island Qld | 24.3% | 20.2% |
| Victor Harbour SA | 24.2% | 16.7% |
| Goolwa-Port Elliott SA | 24.0% | 17.4% |
| Cooloola Qld | 23.3% | 19.4% |
| Sthn Moreton Bay Islands Qld | 22.7% | 15.4% |
| Sussex Inlet-Berrara NSW | 22.6% | 18.3% |
| Paynesville Vic | 22.2% | 19.2% |
| Laurieton-Bonny Hills, NSW | 22.0% | 14.9% |
Source: ABS
While areas with a large proportion of Age Pensioners often also have a high proportion of non-Age Pensioners, areas with a large proportion of non-Age Pensioners are less likely to attract Age Pensioners. The only area to attract both high and low-income retirees in equal numbers is Tea Gardens-Hawks Nest on the NSW mid-north coast.
Work opportunities
These days, retirement is not as black and white as it once was. Whether by necessity or desire, many of today’s retirees wind back their working hours gradually, while others retire then return to work, perhaps part-time. Some start a small business on the side or do consulting work.
That means job opportunities, business supports, and/or good internet coverage may need to be factored into your choice of retirement location. While major cities generally offer more employment opportunities, regional areas may welcome older workers to fill gaps in the workforce. They may also offer supports for new small businesses, which play a key role in keeping regional communities lively and viable.
A 2023 report for the Regional Australia Institute – Against the odds – realising regional Australia’s workforce potential – found the unemployment rate for people aged 55 and over was actually lower in regional Australia (3.77%) than in metropolitan areas (4.16%), and lower than all other demographic groups.
The report found the workforce participation rate for people aged 55+ was highest in mining and agricultural regions such as the Pilbara in WA central Queensland. Participation rates were also high in so-called connected lifestyle regions close to major metropolitan centres. These included the Boddington, Chittering and Serpentine-Jarrahdale areas near Perth, the Light region near Adelaide, and Queanbeyan-Palerang near Canberra.
In contrast, many coastal retirement and seachange areas had very low workforce participation rates.
The psychology of wants vs needs
The cost of living in certain locations also has a psychological and behavioural component, otherwise known as keeping up with the Joneses.
If your neighbours or friends all have luxury vehicles in their driveway you may feel under pressure to do the same even if a Corolla is more in line with your budget. In some areas, messing around in boats requires a cruising yacht while in others a tinny will do. Dining and entertainment options may be limited to the local pub or community hall in small country towns, although this is rapidly changing as coffee culture and the paddock to plate ethos spread to lifestyle destinations such as Byron Bay, the Sunshine Coast and beyond. What does exist is generally cheaper and more likely to attract a broad mix of the local population than a night out in well-heeled city areas.
In other words, location and local lifestyles may blur the perception of wants and needs.
What to look for in a retirement location
If you are considering a move to your dream retirement location, it’s important to do some research before you make the leap (see checklist below). You may have fond memories of holidays in certain towns or cities, but the realities of daily life may not live up to the dream.
Property prices are a major factor, as is economic diversity and local incomes if you are planning to start a business or side hustle. Liveability factors such as access to beaches and national parks are also a big drawcard.
A useful tool to help you analyse and compare these factors across different local government areas is the Regional Australia Institute (RAI) Good Life Guide.
For example, in Sydney’s Canterbury-Bankstown area the median home price is $981,000 which is 17.5 times the median income of just over $56,000. On the NSW mid-coast, which includes popular retirement spots such as Hawks Nest and Forster, the median home price is $650,000, or 12.8 times the median income of $50,586.
Similarly, in Melbourne’s city of Monash, the median home price is $1.2 million, about 20 times the local median income. In regional Victoria’s Ballarat, the median home price is $515,000 with a price-to-income ratio of 8.6, less than half that of Monash.
That leaves quite a bit of change in the pocket for downsizers which could be used to boost your super and/or fund travel, a caravan, future aged care or other big-ticket items. The Good Life Guide was updated and relaunched in September 2024 and will be updated annually. RAI chief executive, Liz Ritchie said the most recent data shows there are dozens of areas across regional Australia where the median home price is $500,000 or less.
For example, Queensland’s Cassowary Coast ($335,000) and Mackay ($460,000), Tamworth ($500,000) in NSW, Mildura ($405,000) and Greater Shepparton ($466,000) in Victoria, Devonport ($488,000) Tasmania, and Geraldton ($373,750) and Esperance ($400,000) WA.
Adding location to the retirement income mix
When it comes to retirement planning, the amount of money you have saved in and out of super is only part of the equation. Just as important is the amount of money you spend.
General retirement planning advice tends to be based around averages. ASFA’s Retirement Standard focuses on retirement spending with sample budgets for modest and comfortable standards of living. It also estimates the super balance you will need to fund a modest or comfortable retirement lifestyle. While providing a helpful planning tool, once again it relies on national averages.
Yet none of us is average. The question of how much you need to retire on is personal. The answer will depend on a range of factors including your lifestyle, your health and how long you live, whether you are single or a couple, whether you own your home and where you live. To paraphrase a former Prime Minister, location doesn’t explain everything, but it does explain something.
Retirement location checklist
If you are thinking of a seachange or treechange, be sure to check these five liveability factors:
- Health services – as well as a shortage GPs, access to specialists can be limited in regional areas
- Cost of living – there may be trade-offs between the cost of housing, wages, transport and other services
- Amenity – natural, physical and cultural attributes. Access to nature, green space, outdoor recreational activities, retail outlets and perceived safety
- Connection to community – clubs/groups, volunteer opportunities, cultural activities and events
- Lifestyle – the opportunity to live the life you want to lead, without stress or money worries, and close to the people and activities you love.
Source: Modified RAI Liveability Toolkit
