April to June 2026 Economic Update: What It Means for Your Retirement Planning

A note on this update

This update covers the April to June 2026 quarter, with figures as at 30 June 2026. An earlier version of this article said the Reserve Bank had paused and that further rises looked less likely. In fact, the cash rate target rose to 4.35% in May 2026 and was held in June, and we’ve corrected the article to match. Rates and other figures have moved since 30 June, so it’s worth checking the latest figures before you make any decisions. It doesn’t include share market, currency or commodity figures, because they date within days, and it doesn’t forecast where markets or interest rates will go next. It’s general information about what changed and the questions worth asking.

1. Interest rates: another rise in May

The Reserve Bank raised its cash rate target by 0.25 percentage points to 4.35% from 6 May 2026. That was the third rise in 2026, after February and March. The Board held the rate at its June meeting, so the cash rate target was 4.35% as at 30 June 2026.

The cash rate influences other interest rates, including what banks pay on savings and term deposits and what they charge on loans. Each bank sets its own rates, though, so it’s worth checking what your own accounts are actually paying.

If you’re retired or close to it, a higher cash rate can cut both ways. Interest on cash and term deposits may be higher, while any remaining mortgage or investment loan may cost more. Neither is a reason to change your whole plan, but both are worth a look at your next review.

Deeming: why the interest you earn isn’t what Centrelink counts

If you get the Age Pension, or hope to, Centrelink doesn’t use the interest you actually earn on financial assets such as bank accounts, term deposits and shares. It uses deeming rates instead. According to Services Australia:

• A lower deeming rate applies to financial assets up to a threshold, and a higher rate applies to anything above it. The thresholds are different for singles and couples.
• Deeming rates and thresholds are reviewed and can change, so it’s worth checking Services Australia for the rates that apply to you.
• If your actual return is higher than the deemed rate, the extra isn’t counted under the income test.

Because of deeming, shopping around for a better savings rate won’t change the income Centrelink counts, although it can still make a difference to your own budget.

2. Inflation and the cost of living

The ABS says the Consumer Price Index rose 4.2% in the 12 months to April 2026, 4.0% in the 12 months to May and 3.8% in the 12 months to June, above the Reserve Bank’s 2 to 3% target throughout the quarter. The June figure was published after the quarter ended.

When there’s no regular pay packet, rising prices show up quickly in the household budget.

A few things help put the numbers in context:

• The Age Pension is indexed twice a year, in March and September. Your rate depends on the income and assets tests, and Services Australia publishes the current maximum rates.
• ASFA’s comfortable budget for homeowners aged 65 to 84 is $56,166 a year for a single person and $78,998 a year for a couple (June quarter 2026, published after this quarter). These are national benchmarks, not a Sunshine Coast budget, and our guide to how much you need to retire on the Sunshine Coast explains how to use them.
• Your own spending is the number that matters most. It’s worth checking your actual electricity, insurance and health costs against last year rather than relying on an average.

3. Budget 2026–27: changes for property investors

The Federal Budget, handed down on 12 May 2026, proposed changes to how investment property and capital gains would be taxed. According to Treasury:

• Capital gains tax: from 1 July 2027, the 50% CGT discount is to be replaced with a discount based on inflation, plus a minimum 30% tax rate on capital gains. The new arrangements apply only to gains that accrue from 1 July 2027, when they’re realised.
• New builds: investors who buy new builds can choose either the existing 50% discount or the new inflation-based arrangements and minimum tax.
• Negative gearing: from 1 July 2027, negative gearing of residential property is to be limited to new builds. Properties held before the announcement (7:30pm AEST, 12 May 2026) are exempt from this change.
• Established homes bought after 12 May 2026: rental losses can be deducted against other residential property income, including capital gains, and excess losses can be carried forward, but not deducted against wages or other non-residential income.

These are proposed Budget measures and aren’t law yet. The final detail depends on legislation. If you own an investment property, or are thinking about selling one, it’s worth talking through timing and cash flow before you act.

What this means for your home

These proposals are about investment property. Under the ATO’s main residence exemption, your home is generally exempt from capital gains tax if it’s been your home for the whole time you’ve owned it, hasn’t been used to produce income and is on land of 2 hectares or less. Services Australia also generally doesn’t count your principal home, and up to 2 hectares of land it’s on, under the Age Pension assets test.

If you’re thinking about downsizing, the downsizer contribution may let you put up to $300,000 each from the sale of your home into super once you’re 55 or older, if you’ve owned the home for 10 years or more and meet the other ATO conditions. It doesn’t count towards your contribution caps, but it does count towards your total super balance, and selling your home can affect the Age Pension. Our article on how downsizing can affect your Age Pension covers this in more detail.

What tends to stay the same

Quarters like this one can feel noisy. Rates move, budgets change and headlines come and go. For most people planning their retirement, the questions that matter don’t change much from quarter to quarter:

• How much do you need to spend each year, and where will it come from?
• How much cash do you want to hold for the next year or two, so you’re less likely to need to sell investments after a market fall? Our guide to market falls near retirement explains how a cash buffer can work.
• Is your mix of investments still in line with your plans and your comfort with ups and downs?
• Do any of the Budget proposals, or the way deeming works, affect your situation directly?

In our Path to Prosperity approach, these sit alongside the bigger questions about how you want to spend your time, whether that’s mornings on the Kings Beach boardwalk or more days with the grandkids.

Simon Pederson, M.Fin, B.Bus (FP), Founder and Lead Retirement Planner