How to survive retirement on a small income

How to overcome fear of running out of money when you retire.

Coping on the smell of an oily rag

The fear of running out of money in old age is common among people contemplating hanging up their hat or already at the start of their retirement.

Those unfortunate enough not to have a healthy superannuation balance or who don’t own their home or other significant assets are possibly justified in this concern.

The Federal Government website, MoneySmart, recommends seeking professional advice before making a major financial decision about your nest egg.

The best place to start this journey is to understand your current financial position. YourLifeChoices RetirePlanner tool lists entitlements for older Australians and other  information that should not be overlooked when mapping out your retirement finances.

The tool also factors in any superannuation balance, investments, savings or income streams and assets that may affect your pension.

Many financial planners spook their clients by repeating a myth that in order to retire comfortably, a balance of more than $1 million is necessary. This is not true if your living costs and expectations are reasonable.

A YourLifeChoices analysis reported in the December 2017 Retirement Affordability Index indicates that just over half of retirees (52 per cent) will be entitled to part or full Age Pensions even though they may have savings, whether in superannuation or elsewhere.

Barefoot Investor Scott Pape regularly writes about the reality that ­– with conscientious planning ­– even retirees on a low income can build up some financial security as the years roll on.

Pape’s number one golden rule of retirement is to keep working. Not in the same way you did before retirement, but perhaps a couple of days or even just a few hours a week. This may also help to keep you mentally and physically healthier, which could reduce medical and pharmaceutical bills down the track.

Working during semi-retirement is encouraged by the Federal Government. In fact, a couple can earn more than $7500 a year without their pension entitlements being affected and much more with only minimal reductions to government payments.

YourLifeChoices research shows that a modest retirement requires about $35,700 a year to cover day-to-day costs for couples ($22,450 for singles). An affluent couple who travel and dine out would need around $74,000 to cover their spending ($42,200 for singles).

Older Australians who do not own a home are the ones facing the biggest financial struggles. If you are in this category, be reassured that there are many organisations out there that have your back.

If affording healthy groceries is a challenge, look up one of the food rescue/banks listed here to see if there is one near you.

Thanks to the popularity of op-shopping, you can spot several good quality second hand stores in most suburbs nowadays. They are full of all manner of useful things, in addition to clothes.

And if paying your utility bills is a problem, ring the companies and tell them. All major service providers are obliged to extend terms to customers who ask for some help keeping up with payments.

MoneySmart also lists a number of services and hotlines to help get your money matters back in order. Plus, the Department of Human Services can also lend a hand if you are experiencing an extreme financial crisis.

RELATED ARTICLES





    COMMENTS

    To make a comment, please register or login
    mike
    15th Mar 2018
    10:47am
    Yes well with Hockey smashing the retirement plans of an estimated 540000 retirees, those who worked and saved, and Turnbull promising to reinstate the concession card, but on;y for a very select few, now Shorten stopping dividend rebates. Its reduced income reduced income and still more reduced income on all those who worked and saved. Its NOT an attack on the wealthy, its an attack on the working middle class the retirees and the pensioners.
    Anonymous
    15th Mar 2018
    11:09am
    Yes, and we WILL all run out of money, as will the government, because of this ridiculous strategy of rewarding those who DO NOT save for retirement and harshly penalizing those who do!
    Alexii
    15th Mar 2018
    1:26pm
    All the political parties would probably prefer it if all the pensioners and part pensioners cell off the perch sooner rather than later.
    inextratime
    16th Mar 2018
    12:32am
    OGR

    So people who raised children and who worked in not so well paid jobs and could not afford a mortgage and therefore did not receive a massive capital gain from an asset that produced nothing over the past 30 years and who still have to pay off someone else's mortage because that person was able to borrow against an asset that will also attract a massive capital gain are rewarded because they did not plan for their retirement and spent money on raising and educating their kids. Yeh that's logical.
    Anonymous
    16th Mar 2018
    8:29am
    inextratine, I raised children and worked in the lowest paid jobs going with a disabled partner and a disabled child costing me a fortune and I STILL paid off a house and saved for old age. And now I'm suffering for it while bludgers, cheats, spendthrifts, and irresponsible people are paid up to $1 million of taxpayer money in retirement and I get NOTHING except abuse from the ''poor me'' whingers who want my house taken off me so more can be handed to these layabouts and cheats. Give me a break!

    Anyone in our generation who got off their arse and worked and lived frugally had as much or better opportunity as I did, and the same applies today. There are a handful of genuinely disadvantaged - who suffered sickness, disability, major crisis, etc. I am happy to pay tax to help them, but I'm heartily sick of the lazy socialist whingers who want to take what people worked their guts out for decades to acquire, thinking they would have comfort in their old age and a little to leave to their kids.
    Able to borrow? There were concessional loans for low income earners, provisions to buy housing commission properties cheaply. I didn't know anyone, in my youth, who wasn't on a low wage. And I didn't know ANYONE who didn't buy a home.

    All this BS about 'lucky' people is just that. The politics of envy. I worked hard. I saved. I went without. I struggled. I'll be dammed if I'll condone suggestions that I should now suffer for that while those who didn't strive get handouts.
    Anonymous
    16th Mar 2018
    8:29am
    inextratine, I raised children and worked in the lowest paid jobs going with a disabled partner and a disabled child costing me a fortune and I STILL paid off a house and saved for old age. And now I'm suffering for it while bludgers, cheats, spendthrifts, and irresponsible people are paid up to $1 million of taxpayer money in retirement and I get NOTHING except abuse from the ''poor me'' whingers who want my house taken off me so more can be handed to these layabouts and cheats. Give me a break!

    Anyone in our generation who got off their arse and worked and lived frugally had as much or better opportunity as I did, and the same applies today. There are a handful of genuinely disadvantaged - who suffered sickness, disability, major crisis, etc. I am happy to pay tax to help them, but I'm heartily sick of the lazy socialist whingers who want to take what people worked their guts out for decades to acquire, thinking they would have comfort in their old age and a little to leave to their kids.
    Able to borrow? There were concessional loans for low income earners, provisions to buy housing commission properties cheaply. I didn't know anyone, in my youth, who wasn't on a low wage. And I didn't know ANYONE who didn't buy a home.

    All this BS about 'lucky' people is just that. The politics of envy. I worked hard. I saved. I went without. I struggled. I'll be dammed if I'll condone suggestions that I should now suffer for that while those who didn't strive get handouts.
    ozirules
    15th Mar 2018
    10:52am
    Goodonya Scott Pape.....the number one rule for financial security in retirement is to keep working. Beam me up Scotty !!!
    Anonymous
    15th Mar 2018
    11:11am
    Well, DO NOT SAVE AND INVEST, because you'll be regarded and treated as a criminal and forced to divest everything and live on savings until you have none. The politics of envy are alive and well, but only in regard to the working and lower middle class. The wealthy are allowed to keep partying.
    ozirules
    15th Mar 2018
    11:21am
    I have to agree with your comments OGR
    Alexii
    15th Mar 2018
    1:27pm
    Very true, Rainey.
    sunnyOz
    15th Mar 2018
    1:34pm
    Yeah ozirules - and where are the jobs? Or more importantly - where are the EMPLOYERS so that you can work? After a company closure about 5 years ago, all I could manage was some contract work, which ended last October 2017. 2 months off 65, I COULD NOT and CANNOT get a job - even as a cleaner. The types, and number of jobs I have applied for since October - 237. I have had a few interviews - but the minute they actually see me - you can almost see the look on the interviewers face!
    And no - I am NOT the hunchback of notre-dame! One problem is that I sound young on the phone - company's ring and say - 'you are exactly what the company is looking for'. Go to an interview - then hear nothing. Follow up with feedback - 'sorry, you are not what the company is looking for'. NOTHING has changed - the only difference is that they have LOOKED at me.
    I would love to be 'still working'. BUT - I find most of the time the older people who snigger and say to keep working, as they are - have been in their job for many years. Is a hell of a BIG difference between STAYING in a job, and GETTING a job.
    I have applied for jobs at Bunnings, retail, fruit shops, packing flowers, cleaner, supermarket, order picking, clerical, admin, date processing, driving, food processing...you name it. Zilch. Nothing. Eating up my super - Newstart is a joke! And Job Providers are not the slightest bit interested in helping older applicants - just the funds they get from the govt.
    As for saying Savings, and invest... I worked on my parents farm till my mid 30's, left with nothing, then worked in low paying casual jobs whilst training, at same time paying my own way. And being single, still have the same bills.
    I would LOVE to be working, but I am not the one who needs to change.
    Retired Knowall
    15th Mar 2018
    8:32pm
    I worked 2 jobs, raised 2 kids, invested when I could and now am a part time Self Funded Retiree living outside the clutches of the Govt. It's all too easy to make uneducated generalizations and post petulant hysterical rants.

    15th Mar 2018
    12:55pm
    Live within your means.
    Troubadour
    15th Mar 2018
    12:59pm
    Yes something we have tried to teach our kids and their friends. My dear old dad always adhered to this and so do we. Sadly too much credit card activity these days
    with most people.
    Anonymous
    18th Mar 2018
    2:48pm
    Easy if your income is enough to cover essentials. Not possible for everyone, Old Man. Have a little bit of compassion. I know the vast majority are wasteful spenders, but there are some who simply cannot earn enough to live within their means no matter how hard they try. We should not pretend an overly simplistic answer is universally applicable.
    Troubadour
    15th Mar 2018
    12:56pm
    Some of us were busy keeping our families educated, well fed, after School sports activities (one being an elite athlete) so not much left for those savings you talk about!!
    Anonymous
    18th Mar 2018
    2:51pm
    Yep, on one minimum wage, with a disabled partner and a disabled child whose therapy cost a fortune (a lot more, I'll bet, than for an ''elite athlete'' and a lot more necessary!), and I STILL managed to save. I know there are some whose circumstances made it impossible, but the vast majority just overspent. But then, that's okay, because now they are happily collecting pensions and screaming for the savers to be stripped of all the benefits they worked so hard to earn.
    cupoftea
    15th Mar 2018
    1:30pm
    Mike wasn't it joe that said get better job, so he did ambassador in the U.S.A I'm allright jack up yours

    15th Mar 2018
    3:31pm
    "YourLifeChoices research shows that a modest retirement requires about $35,700 a year to cover day-to-day costs for couples ($22,450 for singles)"

    Thats less than the pension

    So everyone stop whining
    Retired Knowall
    16th Mar 2018
    8:58am
    That's a bit harsh, don't you know they are entitled to more.
    Anonymous
    18th Mar 2018
    2:43pm
    Whether that is sufficient or not depends entirely on personal circumstances. With a partner who needs physio twice weekly for average 5 months a year, I wouldn't have a hope of living on that. Averages are always very misleading.