July to September 2026 Economic Update: What It Means for Your Retirement Planning

A note on this update

This update covers the July to September 2026 quarter, with figures as at 30 September 2026 unless stated. Our April to June 2026 update covers the quarter before. 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: a hold in August, a rise in September

The Reserve Bank held its cash rate target at 4.35% in August, then raised it by 0.25 percentage points to 4.60% from 30 September 2026. That was the fourth rise in 2026, after February, March and May. Its next decision is due on 3 November 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. From 20 September 2026, according to Services Australia:

• A single person’s first $66,800 of financial assets is deemed to earn 1.75%, and anything above that is deemed to earn 3.75%.
• For a couple where at least one of you gets a pension, the first $110,600 of your combined financial assets is deemed to earn 1.75%, and anything above that 3.75%.
• If your actual return is higher than the deemed rate, the extra isn’t counted under the income test.

Illustration only. Pam and Rob are a retired couple in Caloundra with $300,000 in combined financial assets, and Pam gets the Age Pension. Centrelink would deem the first $110,600 to earn 1.75% ($1,935.50 a year) and the remaining $189,400 to earn 3.75% ($7,102.50 a year), so about $9,038 a year is counted as income, whatever their accounts actually pay. This isn’t a pension calculation, and other income and assets also count.

The 20 September change on its own isn’t a reason to move money. What it does mean is that shopping around for a better savings rate won’t change the income Centrelink counts.

2. Inflation and the cost of living

The ABS says the Consumer Price Index rose 3.5% in the 12 months to July 2026 and 4.0% in the 12 months to August 2026, above the Reserve Bank’s 2 to 3% target. In the 12 months to August, electricity rose 13.2%, largely because Commonwealth electricity rebates ended, and automotive fuel rose 13.5%. The September figure, which completes the quarter, is due from the ABS on 28 October 2026.

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. From 20 September 2026, the maximum rate, including supplements, is $1,237.70 a fortnight for a single person and $1,866.00 a fortnight for a couple combined (Services Australia). The next indexation date is 20 March 2027.
• 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). 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. Super: higher contribution caps from 1 July 2026

The new financial year brought higher caps on how much you can add to super each year before extra tax may apply. According to the ATO:

• Concessional contributions cap: $32,500 from 1 July 2026, up from $30,000, after indexation in line with average weekly ordinary time earnings. This covers employer contributions, including salary sacrifice, and personal contributions you claim a tax deduction for.
• Non-concessional contributions cap: $130,000 for 2026–27, up from $120,000. If you’re under 75, you may be able to bring forward up to 3 years of caps in one year, depending on your total super balance.
• The general transfer balance cap, which limits how much super can be moved into the retirement phase, is $2.1 million for 2026–27, up from $2 million (personal caps can be lower).
• Going over a cap may mean paying extra tax, and all of your funds are added together.

Whether extra contributions suit you depends on your age, your total super balance and the rest of your plans. It’s worth checking before you add more.

Budget property changes: still proposals

The property tax changes in the 12 May 2026 Budget are still proposed measures. According to Treasury, the 50% CGT discount is proposed to be replaced with an inflation-based discount and a minimum 30% tax rate for gains that accrue from 1 July 2027, and negative gearing of residential property is proposed to be limited to new builds from 1 July 2027. Properties held before 7:30pm AEST on 12 May 2026 are exempt from the negative gearing change. The final detail depends on legislation. Our April to June 2026 update covers these proposals in more detail.

What this means for your home

The Budget 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 super cap, deeming or Age Pension changes 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