What Life is Really Like on the Pension

Here is the link - Source.......Sydney Morning Herald, Sally Pattern (April 2016)


What life is really like on the age pension

Extract below

You can make do from week to week, but when big items come along, you can really struggle. For example, if the fridge packs (it) in, or your shoes need repairing, often you've got nothing to fall back on," says Canion.

"I advise all my clients to maximise the amount of money they save for retirement so that don't need to rely on the age pension," Rahman adds.

It is sage advice when you consider the size of the age pension – which is what the government will provide for retirees who leave the workforce with little in the way of assets (less than $202,500 in total assets for a single homeowner or $291,500 for a couple who own their own home).

ASFA estimates that a single person between the age of 65 and 85 would need an income of $23,800 to achieve a modest lifestyle. The catch is that this requires spending nothing on items such as gifts, music, home improvements or overseas holidays.

 

The full aged pension for a single person is close to this amount. I see this as being about the right amount.

IMHO people shouldn't expect that they can use the aged pension to fund gifts, music, home improvements and overseas holidays.

 

I have a single mother friend doing it very tough... in need of a new (or repaired) washing machine, fridge, and her car always seems to be breaking down and she has not got the funds to fix it....
To come up with a few hundred dollars to make things good would throw out her budget at Christmas...

I said I'd sell to her an excess fridge and washing machine that I have at a nominal price and omg, her reaction was over the top thankful....

To me, it's really nothing. To her, she can't believe it... she really simply has no spare money to spend to replace items like these.

 

Forken grouse mate! Blow the whole lot down the rsl and bingo.

 

I always tell young people to take action now and not wait for the inevitable. Because it is the undeniable inevitable.

 

Actually.... fair point! Shouldn't be able to spend on overseas holidays, I agree with that. It should be enough to make do. However it does make it very difficult if anything at home breaks down and needs repairs....
I think being able to buy items such as small discretionary gifts should be doable still though.

 

biz

how cruel. not da bingo

 

Sometimes, when am deciding on a charity I want to donate to - pensioners are not on my list. Why should I assist anyone who wasn't able to have a strategy for retirement ? Of course, am hoping karma doesn't bite me in my backside in a few decades

 

I would have thought the ex-partner or dad would have assisted her.
It is pretty tough for a single mum to survive by herself
Ps i think we are the first generation to look after our parents , our ex partners parents, the ex partners (plural) our children and ourselves.!

 

Totally agree, it should cover the basics.

I don't want to sound cold-hearted, but as someone more famous than me once said "Life wasn't meant to be easy".

I will have to respectively disagree.

When I was doing it tough, I went without the basics to fund small discretionary gifts. But that was my call.

When I was turning 21, my parents gave me some money to buy myself a 21st birthday present. I used this money to buy the basics; I didn't buy that present until 10 years later.

I probably could have asked my parents for more money but I am a big believer in 'paddling my own canoe'. I have the same expectations of others.

 

For context, we were primary school friends, and our homes were just a short walk away so she used to come to my home and I used to go to her place to play and we used to ride our bikes together on the local streets.
But we went onto different high schools. I have absolutely no idea what happened to the dad... she has never ever mentioned him.

 

One thing I did was lend a friend a few hundred dollars for her camera for her "photography business" (she told me had to make progress repayments on it).... then I realised she had the latest iPhone (probably bought on an expensive plan) however I myself only had a basic phone bought outright and on the lowest plan.

So... yes.... priorities....

 

I just had a thought... the Cashflow 101 game should have a "single mother working part time with unsteady employment" card, with car, fridge and washing machine all needing repairs or replacing. -$400 savings to start and $1000 credit card debt, no child support from the partner however there is government support to pension level that gets progressively taken away if you have passive income...
Banks hesitant to lend money so you have to go to loan sharks, other players or you can get loans at credit card interest rates....
To get out of the rat race you need to make enough passive income to cover say $1000 a week...
Later she is out of work for a full year because she has another baby, and her earning capacity in future employment doesn't go up because of this...

That would be a challenge...

I think it should be added to the game....

Edit: One way to get out of this scenario would be to JV - find the deals for others to purchase and take a finders fee and or a cut of the Cashflow (finders fee is more practical perhaps in real life). Do enough of them to get good capital.... wow, answered my own question.

 

I'm sure they've all worked very hard in their life. Honest, hard work.
However, the last statement in the article, '...it's [the pension] not enough, it needs to go up' reeks of entitlement.
Something so ingrained into the Australian way of life.
It's an expectation 'we' get $920/fortnight.

People need to take responsibility of their finances and educate themselves early on.
Obviously majority on this forum have done just that, but this doesn't reflect the greater population who are working hard, spending hard and not financially educated.

 

There are too many people out there that believe a pension is an entitlement. I hear it from Grey Nomads "I worked all my life, I deserve to get something back".
We need to remember that Super is not that old so older people didn't have that drilled into them. I remember my mum saying I should buy a house, then I will be able to live on the pension. When I started buying houses she told me to be careful not to buy too many otherwise I wouldn't get the pension. OOPS!
She owns her house and, now that she quit smoking she lives easily on the pension.

 

Sounds like they are all Jackie Lambie supporters. And yes, I can understand the older generation that didn't have super throughout their working life may think the pension is "an entitlement"... however it doesn't mean everybody else should too though....

 

Absolutely. Many people under 40 find it difficult to comprehend the pension mindset because their adult reality has always included compulsory superannuation schemes.... as we know that only started in 1992 although super has been around much longer for some.

We are in the midst of a generational shift in societal attitudes towards retirement & how to fund it so many younger peeps seem to struggle to comprehend what life & societal norms were before they arrived... which wasn't very long ago.

 

My mum is 85 yo, had no super in her day she worked as a kitchen hand. Never went on social security etc

she contributes to her community even now at 85 yo, but I don't need to justify this same as those who use negative Gearing to save $ ...its not a crime, it's legal

 

$23,800!

@Indifference is right about pension mindset though. My parents certainly have it. Although they are low income earners, so I kind of understand it.

I share a house with another guy who is early 50's. He has pension mentality too. He is careful with his property investments because he doesn't want to breach to pension asset cap. I am less than 10 years younger but the thought of relying on the pension in retirement horrifies me.

I think the switch from pension mentality to super mentality must have happened over a relatively short period of time

 

The solution to every single financial puzzle/situation isn't always Residential property or property of any kind.