Retirement Without A Nest Egg

We all know that we should try to save as much as we can for retirement. But what happens if that’s not enough? 

Quite simply, you will need to modify your lifestyle to meet your ability to pay for it. This could mean fewer leisure activities and a much simpler retirement than could otherwise be possible, making it difficult to sit back and enjoy retirement.

Not having enough money for retirement will be a reality for far too many Australians. Right now, only a third of retirees are living on what the experts call a comfortable level of income, with roughly half of Australians over 65 still reliant on the age pension. SOURCE

Whilst you may have grand plans for travel, leisure and living the good life in retirement, with no savings how easily will these things be within your reach?

Below are some examples of how your retirement may look if you do not have adequate savings behind you. 

1.     You Will Be Dependant On The Aged Pension

More and more older people are finding themselves in a situation where they reach retirement age without enough savings. With no savings, you will have no choice other than to rely on the Age Pension to get by in retirement. Depending on the lifestyle you want, this can be tough.

A single retiree who qualifies for a full government pension can expect to receive approximately $24,081 a year, including the maximum pension supplement and an energy supplement. A couple can expect to receive approximately $36,301 a year. SOURCE

When you’re living on the aged pension, every dollar counts. Being reliant on the aged pension you also have to face the reality that your entitlements do not keep pace with the cost of living. Rising medical, energy, living and food costs mean many age pensioners go without basics and juggle bills from week-to-week so that they can simply afford to survive.

2.     You Might Need To Downsize

Housing can be one of your biggest expenses. Renting, paying off a mortgage, or paying for upkeep and rates on a property you own can deplete your finances in a hurry.

Should your savings not be able to cover your retirement, your only option will be to downsize(assuming you own your home in the first place). This will mean selling the house that you have worked so long to pay off. You might need to sell possessions and cars in order to live a smaller, more manageable life. 

By downsizing, you will be able to generate some extra money that can be stored away for a rainy day.

If selling your home isn’t an option you may need to consider bringing in a tenant or housemate, whether it's a single renter residing in a section of the house or a couple to share your space with. This can be a big change to your current way of life, but you will instantly cut many of your bills in half.

3.     Your Lifestyle Will Change

Living the good life means something different to everyone, but if you’re managing on a fixed income, such as the age pension, you may have to re-evaluate your priorities. On the aged pension you will only be able to afford fairly basic activities. Some lifestyle changes may include:

•         Basic Clothes
•       Less heating in winter/less cooling in summer
•      Only taking part in no cost or very low cost leisure activities
•      No car or, if you have a car, it may be an older model and you may struggle to afford repairs
•      No private health insurance
•      No budget to fix home maintenance problems

Of course, being happy and healthy is as important as having money, but constantly struggling to balance your bank account, could make achieving either difficult.

Unless you have a secret plan to get free money or you're lucky enough to win the lottery, not saving enough for retirement will leave you scrambling to get by in old age.  

Fortunately, it doesn’t have to be this way. Instead of burying your head in the sand, you can get serious about retirement instead. By making your retirement a priority, you can be confident you’ll never outlive your money. 

I am a Brisbane based financial adviser with clients in Ashgrove, The Gap, Kenmore and Chapel Hill. I help professionals make informed decisions and take back financial control in preparation for retirement.  These are just some of the examples I like to share with my clients to help them gain control over their finances and to prepare for planning for their future. 

I offer a 25-minute financial review session. In this session, I can review your current financial situation. I can see if I can help you achieve your financial goals and the best (and quickest) way to do so. You can contact our office on 07 3102 4948 or email me directly at [email protected]. 

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. 

Massey Financial Advice Pty Ltd (ABN 73 614 676 774) is an authorised representative of Charter Financial Planning Ltd ABN 35 002 976 294, Australian Financial Services Licence 234665.