20 September 2007

Living well on a pension

Michelle posed an interesting question over at aussieslivingsimply this morning. She asked "Is it possible to live well on the age pension?" For our international readers, the age pension is paid to citizens of Australia after they reach the age of 65 - men and women. Michelle says the pension is $877 per couple per fortnight, or $438.50 a week. We live well on less than that. H is on an age pension (I'm only 59 so I have another five years before I can claim), we also have some share investments and money in the bank, but we made a conscious decision to give up a more lavish lifestyle and live on $400 a week.

It would be very difficult to live on this amount if you had debt or were paying rent, although I think there is a rent allowance if you do pay rent. But overall, I have to say it's possible to live on the pension, to live well, to enjoy yourself and to save.

Like just about everything else, you need to be organised and have a plan. If you go from week to week without one, you'd quickly fall on your face. We have a budget that we stick to - our budget is our spending guide which enables us to buy what we need, pay all our bills and save $150 a month. It's not a lot, but it pays for a holiday every year. In our former lives, $150 would have paid for a new pair of shoes, now it's much more valuable to us. We value our time more now so we'd never spend that amount on something so trivial. We're different people, we've changed our lives and the way we look at spending and possessions.

I've written before about how we break up our budget here, and in a few posts that follow that one, so I won't go into the details of it again, suffice to say that we couldn't do it without a budget or spending plan, and by being frugal. Thrift is the glue that holds our lifestyle together. We don't spend on things that don't give us true value. We gave away pay TV, flying, expensive clothes and shoes, magazines and most newspapers, brand name groceries, new cars every few years, eating out at restaurants, paying for someone to iron and clean, giving expensive gifts and pampering ourselves with what money buys. We are still pampered, but it's with healthier things like relaxing with a good (library) book on the front verandah and having the time to really enjoy our garden; we eat well, in fact we eat better now than we ever have with a lot of fresh, organic food rather than stale supermarket food; we don't miss 99% of pay TV and magazines. I'd still love to watch Martha and I'd still love to have my favourite magazine - British Country Living, but that's all I miss and it's not a big deal to miss something, it makes me stronger and I am better for it. And all the other things we gave up are nothing, we don't miss or think about them now. Our lives are better and we are happier than we've ever been.

We still pay for top cover private health insurance, we still have our dogs, we have a reliable car and whenever we have to buy something, we shop around and make sure we are getting the best value for our dollars. All those things are covered in that $400 a week.

So we are proof that living well on a pension is possible. We couldn't have done it without changing the way we see possessions and success. Success to us now is not a new car, it's whether the tomatoes have a bigger crop than they did last year. Our success now is seeing our sons mature and live their own lives well. We've taken the emphasis off money, we realise now that you don't read about true quality on a label but rather by the smile on someone's face or in the feeling of satisfaction after a hard days work. True happiness isn't about getting everything your heart desires, it's more about reaching your genuine potential and living a life that reflects that. And, ladies and gentlemen, I'm happy to say, you can do that on $400 a week, and probably less.
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