There’s no doubt that Australia has an ageing population. Between 2010 and 2015 there was an increase of almost 20 percent in the number of Australians over 65, according to the ABS. If you imagine the strain that’s putting on the Age Pension, you can also understand why a successful superannuation system is so important for the future of the country.
But many people have no choice other than to rely on the Age Pension to get by in retirement. This can be tough.
However, a comfortable lifestyle means different things to different people. If you manage your money carefully, receiving the Age Pension alone can be enough to enjoy a simple lifestyle in your retirement, maybe even with one or two of your favourite creature comforts included.
Managing your money begins with making a comprehensive budget. Start by creating a long-term plan that encompasses all major and minor costs you can foresee coming up during your entire retirement. You can use the MoneySmart Budget Planner to work out your daily and weekly expenses, so you don’t end up living on bread and water for 20 years after you retire. Or try Canstar’s Budget Calculator right now.
After you’ve made your budget, here are some tips for managing life on the Age Pension.
Tip 1: Find out your entitlements
Even if you don’t get the age pension, you may be eligible for other benefits, such as travel concessions, cheaper medicines and reduced council and water rates. The Seniors Card will also give you discounts on travel and some retail services. Check the Human Services website or ASIC MoneySmart’s list of senior’s concessions in over 55s – your money to find out if you could be claiming any concessions.
Tip 2: Budget to take occasional short Holidays
Budgeting to take a short trip away once a year or every second year is much cheaper than budgeting for a big blow-out overseas trip once in 10 years. Besides, Centrelink will cut off your Age Pension if you’re out of the country for 12 months or more.
Tip 3: Downscale the opera
It doesn’t literally have to be the opera! Downscaling may mean different things to different people, but essentially, look for the cheaper or the free versions of the things you already love. If you used to have a yearly membership to go see the Royal Opera, switch it for the membership at a local community theatre group, or even just renting out or borrowing from then library the DVDs of your favourite operas.
Tip 4: Sell everything you don’t need
Ask a family member to put things up on eBay or Gumtree if a garage sale isn’t practical where you live. Reducing your clutter can make cleaning easier, free up some space, help “declutter” your mind as well, plus give you some extra cash.
Tip 5: Avoid major shopping centres
Anyone who’s gone into credit card debt – in their retirement or at any other stage of life – will tell you that going near shops is only a temptation for unexpected spending sprees. Get your groceries at your local store instead of a major shopping centre, to avoid impulse shopping at any other stores on the way. Alternatively, buy online. Interestingly, a recent Canstar Blue survey of more than 1,400 shoppers found that 58% of respondents said that they spend less online (on groceries) than they would if they went to a bricks and mortar store. That included 55% of those aged 60 – 69.
Tip 6: Quit a vice
It’s never too late to quit smoking, or cut down on your drinking. These things both steal an incredible amount of money from your pension every fortnight. With cigarettes tipped to cost $40 a packet in a few years, these things really do steal, not borrow – they give nothing back but bad health and bad relationships. There are many free programs that can help get your health and your budget back on the straight and narrow.
Tip 7: Visit the library, or have them visit you
Books are getting more and more expensive, but they’re still available for free from your local library. Pensioners can even get books delivered to them once a month under different library schemes.
Tip 8: Keep a spare change jar
We don’t pay for that many things in cash anymore – unless we’re budgeting with the cash envelope system – but if you get change for something and it’s less than a dollar, put it in a jar. Take the jar to the bank once a month and enjoy that extra top-up to your account. There’s also an easy way to invest your spare change!
Tip 9: Feel free to say no
As we get older and see our kids or even grandkids come into different needs, it can be tempting to give away money we can’t afford to give to help them out. A REST Superannuation survey recently found that 72% of older Australians plan to help adult children financially. If you can afford it, great, but don’t feel pressured to do this – it’s definitely okay to say “no” whenever you need to! And it teaches them a valuable lesson as well, since they can’t just rely on you for a hand-out.