The Meeting Place

Retirees slash spending due to COVID-19 concerns

purse with combination lock

New research from YourLifeChoices preferred partner Challenger revealed that almost half of retirees aren’t confident about their financial security over the next five years.

The survey revealed how older Australians have cut back on everyday necessities and travel, with 65 per cent of retirees feeling concerned about their retirement income in general.

Of almost all adults (97 per cent) aged 40 and over questioned were concerned about the Australian economy, more so than their own health and wellbeing (81 per cent).

More than three-quarters said they were worried about their family or friends’ job status (77 per cent).

“Sixty-five per cent of retirees are concerned about their income during retirement and 57 per cent said they plan to make changes to their finances,” said Challenger chief executive of distribution, product and marketing, Angela Murphy.

“Due to feeling uncertain about the future, unfortunately for many this means they are cutting back on necessities like food and energy bills.”

Retirees and non-retirees are closely monitoring their everyday spending to alleviate their financial stress, by reducing expenditure on clothes and accessories (46 per cent), making changes to energy bills (12 per cent) and amending insurance plans (9 per cent).

More than a quarter (27 per cent) are reducing their food shopping expenses and 37 per cent are spending less on clothes. Six per cent of retirees plan on cutting out travel and holidays.

However, despite their concerns, only half of all respondents have taken or are planning to take action to address their worries.

Nearly a third of the respondents (29 per cent) who expressed worries around their financial wellbeing hadn’t done anything to alleviate their concern.

“We know from our previous research in this area that when people feel overwhelmed by their financial situation they tend to stagnate because they find the choices too complex or they simply don’t know how to take the first step,” said Ms Murphy.

“The coronavirus pandemic has put retirement income in the spotlight and many older Australians are evidently questioning the confidence they previously had about their financial situation and what this might mean for their retirement plans over the longer-term.”

Are you worried about your retirement income now? How long do you think your savings will last? Are you actively monitoring your spending due to concerns over COVID-19, or would you be doing it regardless?

12 comments

If you rely on pension as I do, then you are always looking for ways to reduce your costs.

With both majors set on  keeping pensioners as poor as possible and stopping them with impunitive restrictions like income they can earn, it will never improve.

Agreed Mogo51, but be thankful for a regular income payment that increases twice a year. Some retirees are seeing their income totally disappear or slashed to less than half the OAP. 

It's not been easy during the pandemic, with prices at the supermarket and other places increasing by 40 - 50 per cent.  And yes, we got the $750 stimulus, but nothing else.  Unlike many wage earners who effectively had their income almost doubled.  It seems as if pensioners and those on disability are always left behind.  Is this because we are not in the workforce?  We pay the same as workers for our goods and services, for the most part.  Although the $200 rebate on my power bill was a nice surprise.  We are destined to remain at the bottom of the pile it seems, very hard if you also have a mortgage as you get zero help with that.

"prices at the supermarket and other places increasing by 40 - 50 per cent" - YIKES!! Whereabouts are you? I have noticed some increases in fruit and veg due to the seasons, and maybe fewer specials but that is because I'm buying from local IGA instead of Coles or Woolworths (or Aldi but I don't shop there)

why would borrowers need help with a mortgage when interest rates are so low? Hopefully you will not be among those who find they overcommitted when the prices ease eventually.

patti, I'm in the casual workforce, got no work / pay for 10 weeks as my employer was not eligible for JobKeeper, got no $750 stimulus or power bill rebate or anything else. It's not just pensioners doing it tough.

Fedup, you should have got Jobseeker (Newstart)? As you say many did not get the $750, rebates or other largesse.

 

 

I agree Mogo51. I am not a retiree or a pensioner but care for mum and dad and I just have been made redundant from my 2 day a week job...the pharmacy was sold. I have always spent my money on the necessities...food, petrol and that is it. I wear clothes until they are so worn out. Now I am not going to the hairdressers...due to COVID-19, and will keep away from the gym until there are 0 community cases for 28 days in Victoria, so that will save me money. I don't eat out as it I can't justify $5.00 for a coffee and $20 for a brunch meal, and really I prefer home made food. For me travel is running everyday for an hour and exploring my neighbourhood....I would rather travel and explore my home town, day trips, and cheaper too. It is amazing what you can find and learn! For me , simple little things matter :)

 

 

 

 

I agree with most of what is stated in the intro;  whether a person is self funded retiree or pensioner in these uncertain times I think most people are holding back on spending.  The only luxury we have is the heating if we are cold we put the heating on, which is around 6.30pm.  That is reverse air conditioning. 

Cannot stand all the chimneys that puff out smoke, I feel for the wild life when they have to put up with humans and their fires. We only think of this in summer when we have bush fire smoke!

Like my late parents before us we don't eat so much as we approach 70+, we have smaller meals, we don't have that much interest in large meals or foods like we did two years ago.  I think it comes with the way the skeleton starts to shrink and the body's organs are compromised!   Now we don't spend so much on foods except the odd special treat!  But don't eat out these days and haven't since January.

Never drink coffee but husband likes his afternoon coffee otherwise it is tea or fruit juice.  $5 for a coffee does seem a lot for a drink.

As for clothing the shops have only opened up!  But do we need anymore clothing? At our ages the wardrobes are usually full anyway.  Shoes perhaps is something we would spend more on due to the condition of seniors feet!  Also visits to the Podiatrist are more frequent.   Our Council has this facility for seniors.

Our travelling days are certainly over, will not be going on anymore trips.  Even a trip within our own state doesn't appeal anymore; or even a trip to the Concert Hall, the seats are too uncomfortable or a trip to the movies, prefer to watch what we have at home without the coughing of other members of the public.

 

 

 

 

My wife and I have been fully self funded retirees for the last 20 years and we always watch our spending, balancing necessities against discretionary spending.  Our combined income has shrunk by about 30% over the last decade but our assets exclude us from a part age pension.  We accept that many are worse off than we are, even though about a quarter of our income is spent supporting my wife who has a significant disability. Before encouraging the Reserve Bank to aggressively pursue a policy of reducing the cash rate to its present nonsensical level of 0.25% ( effectively zero) surely Treasury realised the cost to the economy of drastically reducing retirees' term deposit income to present day levels?  We say to the government - read the Bible, particularly the advice  - "As ye sow, so shall ye reap" - when you lament the spending habits of retirees during the current depression.

Well said Buggsie.

 

I have monitored my spending all my life ... if you cannot afford it, do not buy it is my motto.

Unfortunately a lot of australians spend and live for now on credit.

see Australian Debt Clock

https://australiandebtclock.com.au/

 

 

Hi Suze; we use the credit card all the time we use it like a Ledger!  It gets paid off monthly, as far as we are concerned it is the only way to go these days and I cannot remember when I last used cash!

Even for a $4 loaf of bread I use the credit card which the Baker encourages, gone are the days of a $10 limit in most shops as they have opened up.  It avoids handling cash.

Yes, I have always been the same with my spending -- the only thing I have ever borrowed for was my ist home and saved worked hard and paid that off very quick and always stuck to,   if I could no afford something for cash I did without -- when sold that and I bought my now second home I paid in cash --

I also use a Credit card but still only buy on that if I know I can afford to pay it off IN FULL every month but I still like to carry a little cash on me for things I might need if they don't use C/C

I always stick by --- do not let your wants outweigh your needs,  also waste not want not

 

a need is something needed to survive, while a want is something people desire to have - without wants in your life, what is the purpose of an austere existence?

Unfortunately once you have made your decisions about how you are going to fund your retirement and have entered retirement it is quite difficult to change them. Especially if you are collecting a pension or part pension from Centrelink. No-one can read the future and when something hits that we have never experienced before we just have to do the best we can with the situation. The last thing we need later in life when our brains no longer function as cleverly as they used to and when financial situations are as complex as they are, is financial worries. Not everyone can afford a financial adviser and the less you know the more chance you have of being lead astray by their advice. I have spent copious hours trying to work out the best way to invest and to align that with my future physical unknown needs. This is very scary when you no longer have a wage coming in to recover further down the track if you make the wrong decision. I think the reason a lot of people procrastinate with financial decisions is because of the complexity and the fact that no-one knows what their needs are going to be in the future.

Our income position is fortunately adequate at present, at about the same annual income as was my final salary in 1992, i.e. about half the current average wage, and includes full pension plus a small annuity. One of the first things I did on receipt of my super payout back then was to pay off all debt, ensuring that our house is freehold. Since then we have managed several overseas holidays and changed cars over every now and then, gradually drawing down lump sums from the annuity principal as needed and to keep within pension eligibility requirements. To try and preserve as much as possible of the annuity capital during the present financial downturn, I am probably one of the few people taking advantage of the Govt concession to halve the monthly annuity payment until July next year. So far that strategy appears to be working as the capital base has increased in the past month almost to pre-crisis level.

taking advantage of the Govt concession to halve the monthly annuity payment until July next year has worked out well for you ... good decision. Your retirement actions are very much consistent with advice given today on how to use pension and small super balance to fund a comfortable retirement.

I decided when food prices shot up that I’d better try to grow my own, difficult because I’m the angel of death when it comes to gardening.  However I’ve managed to keep alive a few plants so that will save a bit. Restrictions on how far you could drive and closing cafes saved a bit more on petrol and coffee.

Super and savings have taken a hit. Not too bad but being in lockdown made us review our priorities. No, I don’t need as many clothes, no need to have as many coffees/lunches out either. No need to go to the Gym, walking is just as good. Even haircuts can be left a little longer. Always monitor our finances and keep to a budget and the savings we are able to make will be offset by rises in food prices.

Australia has become a nation of debtors. Live on credit, buy now pay later, all the things that scream bankruptcy.

In my opinion, life on a credit card means... you have no control, you don't have a budget and you like pain! I do not have a credit card, when necessary, I use a debit card, because if I don't have the money to pay for something, then I don't get it. Simple!

Living within Your Means

Very good saying that is Sophie.

 

Like I said above I do use a C/C but I treat it like cash and NEVER ever owe money on it, so I do not have to pay interest at all and I have a rewards card -- at $80 a year and I actually make more on that than it costs for a cheaper one, so it pays me to have it by about $30

Wish there were more like you PlanB.

I admire the way you handle your credit card!

The saying, "if you can't afford to pay off your credit card each month, you can't afford a credit card", is still true and ever will be.

Plan B

I have a Coles Cr card that has no annual fee but gives me points wherever I shop... double in Coles and their nominated partners.

Also free deliveries if the purchase is over $100 online.

Had it now for numerous years.

Those who are poor or live week to week with no savings do need a credit card. Unforeseen expenses and needs can crop up that require immediate cash. Examples are: a close relative, parent or adult child who lives a long distance away becomes dangerously physically or mentally ill or is dying and one needs to travel quickly by plane to be with them or help them; or one lives in the bush and needs a car because there is no public transport and the car needs expensive repairs; or one needs expensive specialist medical or dental treatment; or one's beloved pet or other domestic animals need veterinary care. There are many genuine needs (not wants) that cannot be ignored and can only be serviced by instant credit for those who have no cash reserves. Unfortunately it is these people who dive deeper into a poverty cycle as a result. 

I am not sure of specific terms applicable but it is to my understanding as a Centrelink customer you can take out a loan between $300 and $10,000.

12 comments