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.


  1. I just need to figure out a way to get rid of the payments we already have!!Then we could do well. No more car payments..... ever.... I mean it!!!

  2. Hi Rhonda :) A lovely post and thank you for the reminder and encouragement! Happy belated birthday to your dear H. Love, Q

  3. good budgeting is definately the key ~ it is simple to live on less money ~ I had to when I was a single parent, and pay rent too.

  4. My parents live on the pension and have done for the past 12 years. They live a simple life and seem to be content most of the time but as they have aged ( they are now 76 and 80) and can't do everything themselves they find having to pay for home maintenance needs quite expensive. We help them when we can but they don't like to ask for help or worry us so they often prefer to pay someone to do things for them.

  5. So nice to visit here again. :)

    I was raised by a single mother, and we had to live on her small income alone (no help from my father whatsoever). We never ate out, and trips to the movies were a rare treat. We had to save on food, clothes… anything you can imagine – because there was just no other choice.

    If it was possible for us to live on Mom's income alone, it's also possible for other families where the husband earns the same amount of money. They say they can't afford it – but I know that if we made it through because we had to, it can also be done if we choose to do it.

    It IS possible to spend less, much less, and live a rich and happy life!

  6. hubby and I were just discussing this not 5 minutes ago! I agree wholeheartedly, he is not sooo sure, but we are making progress slowly, lovely post Rhonda, especially the last bit!

  7. My Pop lived very well on the single pension for 24 years after my Nan died. In that time he went overseas 3 times and paid cash for a brand new car, only the 2nd new car he ever bought and the 4th car he ever owned and he was 92 when he died! He towed his little caravan around Aus every year until he was 80. He paid his first house off in the 1940's and never had a mortgage after that, actually he never had another debt his whole life! When he died he had over $20K in the bank! He grew most of his own food until he was 90 and lived very simply. He was one of the happiest and most content people I have ever known.

  8. Hi Rhonda
    I have been reading up about pensions lately. You may find you are eligible before you turn 65. Depends when you were born. (One of few financial perks available to older women.)
    Also, there is a little known windfall you can get if you feel you can be bothered working a bit past pension age - not full time - 960 hours paid work in one year I think it is - look up Pension Bonus Scheme at http://www.centrelink.gov.au .
    If you work for at least 960 hours in one year after pension age and then defer claiming the pension, you can get a big lump sum payment from the govt as a reward - goes up depending on how long you leave it - if you wait 5 years before claiming its up around $30,000. If you can live without the pension, or want to keep working, and are healthy, its worth considering as a means of boosting a nest egg. You have to jump through some hoops and register at the right time etc., but it may be worth while for some to consider this.
    Also, did you catch Adrienne Langman talking about Peak Oil on Life Matters on Radio National yesterday? Compelling listening. She's almost convinced me to do the tree change thing.

  9. Do you know Rhonda whether areas such as Montville, Flaxton etc are affected by the Traveston dam? (I know this is totally off topic, so just a yes-no answer is okay)...I have an interstate friend wanting to move there. I have no idea! Bella

  10. Hi Debbie, it sounds like you're on the right track. We all have to work our way out of debt and the decision to do it is often the hardest step to make.

    Hi quinne, thank you from H. He really loved getting all the messages.

    It's impossible without budgeting, ali. I resisted a budget for so long. I wish I'd seen how great they are 30 years ago.

    Jenny, I wonder about how the kids will cope when everything gets more expensive. I reckon us old fogeys know as we've all been through it before, but for those who grew up in prosperous times, it's all new, and probably unbelievable.

    Anna, it's good to see you again. I bet you were taught well and are reaping the benefits of that now.

    Hello Niki and hubby! I'll be writing about this in the next week or so. Often one partner is committed to being frugal and the other is very sceptical about whether it will work. Stay tuned. ; )

    Michelle, I wish I had known your pop. I love talking to older people about how they make do. It's inspiring. I hope you picked up a few of his tricks.

    Marg, don't get excited about getting the age pension before you're 65. I've looked into this as I thought I'd be eligible at 60, like before. It's a sliding scale now and the early baby boomers can claim a bit earlier. My sister was born Jan 46 so is one of the earlier boomers, she gets hers at 64, I think I can get mine at 64½, I am a 1948 baby.
    I would never give up the pleasures of retirement, not for any price. I know the government is urging us to work for the nation but I reckon I've worked for the nation long enough and now I'm working for me and H. I did listen to Adrienne. Her mindset is almost identical to mine, although I support more of a sustainable community approach rather than self sustainability.

    Hi Bella! The Traveston Dam affects the Mary Valley mostly, not Montville and Flaxton. The towns in the Blackall Range are too high up. If your friend moves to Montville, tell her to expect to live with a whole lot of people from Sydney and Melbourne that have taken over the place.

  11. My Husband and I have been married for 18 years and on one income and 3 girls, it's been hard some times but thanks God we survived and managed well, now we are looking to live a sustainable life (though land here is very expensive) and are learning a lot for that day - hope to do so in short time -.
    I've enjoyed your post

  12. This is very lovely for you :). A pensioner in government housing, will usually have rent and electricity taken out of their payment before they receive it Quite often other payments are taken like, centrelink loans, funeral or govt. cleaning fees. If they are living in a Van Park, same thing. Very few pensioners own their own home and can share the maintenance cost with another person. War windows and Legacy beneficiaries come to mind. It is a blessed position to be in; own your own home, have a living husband and somebody to share expenses. Most people on a pension will never have had the good fortune ,ever, to pay $120 for shoes or ever buy a new car. Most were working class or non workers.


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