"It's tough."
"It sucks."
That is how Mima Rahman, a senior financial adviser with ThinkWealth Management, and Patrick Canion of ipac Western Australia respectively describe life on the age pension.
"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).
A single retiree who qualifies for a full government pension can expect to receive $22,700 a year, including a so-called pension supplement and an energy supplement. A couple can expect to receive $34,300 a year.
The income levels are not a long way off the amount that is considered necessary to lead a "modest" lifestyle, according to analysis by the Association of Superannuation Funds of Australia.
But rather than "modest", "frugal" might be a better descriptor.
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 income level allows for an individual to spend just over $980 a year on domestic holidays, $23.80 a month on entertainment such as cinema and musicals, $7.40 a month at the chemist and $77.40 a week on food. A telecommunications package, such as a bundle of home phone, broadband and mobile, needs to come in at no more than $35 a month.
That doesn't allow for much in the way of treats for the grandkids, more expensive cuts of meat or trips to the theatre. The weekly alcohol bill is just $10.30.
In the case of a couple, according to ASFA, they would need to generate $34,200 a year to achieve a modest lifestyle. This limits combined spending at the hairdresser or barber to $36 a month, clothing and footwear purchases to $115.40 a month and spending on food to $160.40 a week. Again there is no provision for gifts or offshore holidays.
If this paints a depressing future, advisers say the answer is to get saving. In order to lead a "comfortable" lifestyle in retirement, an individual would need to be able to generate an income of $43,200 a year and a couple $59,200 a year, argues ASFA.
That might be a tall order, but the reward for being able to save this much will be more money available for meals out, vacations, wine and treats for the grandkids.
How Sally Stabback makes ends meet on the age pension
Paying just $85 rent a week for a one-bedroom unit, retired nurse Sally Stabback says she's one of the fortunate ones.
"I'm very lucky – very, very lucky," says the 73-year-old, who lives in a cluster of units run by a non-profit organisation in Kyneton, about an hour north of Melbourne.
"Before I got here, I had to rent in town. I was paying $270 a week," says the single pensioner.
Stabback worked in public hospitals for much of her life, before being made redundant. She later ran a cleaning business before retiring early because of arthritis about 10 years ago.
"I had a little bit of super, and it was a very little bit. Our wages weren't very big so even if I had have put super away it would have been a piddly amount."
These days she relies solely on the age pension – about $920 a fortnight, including rent assistance and other allowances.
On "payday" she puts aside her rent money, and another $100 for utilities. Of that, she pays $40 to her electricity provider, which puts her into credit ahead of winter.
She has a doctor who bulk bills, but thinks hard before seeing specialists.
As for fun, Stabback says: "If I didn't have a lovely, kind sister I probably wouldn't go much anywhere."
However she does enjoy holding her own "Saturday matinee" at home with old opera videos, catching up with friends for a cuppa or reading murder novels. She also volunteers.
Generally, Stabback says living on the age pension "doesn't feel comfortable because you never feel as though you've got much there to fall back on".
"I consider myself very lucky and I'm very grateful to be able to get the pension – but it's not enough, it needs to go up."
Case study: Larissa Ham
The information in this article should not be taken as financial advice. Please consider your personal circumstances before making any financial decisions.
