How to survive retirement on a small income

Font Size:

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. 

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.

Join YourLifeChoices today
and get this free eBook!

Join
By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy

RELATED LINKS

Listen: Kaye discusses the Retirement Affordability Index

Kaye joins Macquarie Radio to discuss why retirees are worried their money won't last.

Investment strategies and common mistakes

Don't make the mistake of converting all your assets to cash on the day you retire.

ASIC finds banks are working against customers’ best interests

ASIC finds that financial advice given by banks is purely self-serving.

Written by Olga Galacho

21 Comments

Total Comments: 21
  1. 0
    0

    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.

    • 0
      0

      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!

    • 0
      0

      All the political parties would probably prefer it if all the pensioners and part pensioners cell off the perch sooner rather than later.

    • 0
      0

      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.

    • 0
      0

      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.

    • 0
      0

      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.

  2. 0
    0

    Goodonya Scott Pape…..the number one rule for financial security in retirement is to keep working. Beam me up Scotty !!!

    • 0
      0

      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.

    • 0
      0

      I have to agree with your comments OGR

    • 0
      0

      Very true, Rainey.

    • 0
      0

      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.

    • 0
      0

      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.

  3. 0
    0

    Live within your means.

    • 0
      0

      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.

    • 0
      0

      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.

  4. 0
    0

    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!!

    • 0
      0

      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.

  5. 0
    0

    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

  6. 0
    0

    “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

    • 0
      0

      That’s a bit harsh, don’t you know they are entitled to more.

    • 0
      0

      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.


FACEBOOK COMMENTS



SPONSORED LINKS

continue reading

News

How to avoid being tracked online

The internet is most likely monitoring every move you make through your computer or device and, unless you know the...

COVID-19

Aussies want Morrison to refute health misinformation

Australians are fed up with the growing spread of misinformation related to the COVID-19 pandemic and want Prime Minister Scott...

Nutrition

The diet that can put type 2 diabetes into remission

Consuming fewer carbohydrates can potentially put type 2 diabetes into remission. An international study involving Australia's CSIRO found that strict...

Finance

CHOICE tips to take charge of 2021

Have you made a resolution to be better with money this year? After 2020, many of us could probably do...

Lifestyle

The rules and the telltale signs that you're too old to drive

Approaching the subject of giving up driving due to age can be difficult for all involved. While driving offers independence,...

Wellbeing

The dos and don'ts of lifting weights if you're older

If you're to believe what you see on social media, only the young and super fit lift weights. This, unfortunately,...

COVID-19

Pfizer vaccine safe despite Norwegian deaths, say health authorities

Is the Pfizer coronavirus vaccine safe? Health minister Greg Hunt is assuring Australians it is after it was reported that...

Lifestyle

Great things about ageing - as Dawn French says 'it's not for wusses'

A lot of people fear growing older but, if you ask us, the ageing process brings some great benefits, too...

LOADING MORE ARTICLE...