7 hacks for retirees to make your money last longer
As Australians continue to live longer, the squeeze is on to make each dollar last longer – and never moreso than in retirement.
Life expectancies in Australia are now 85.4 years for women and 81.3 years for men. Meanwhile, the average age at retirement for all retirees is 56.3 years. That’s up to 29.1 years of retirement to be paid for without a salaried income.
Thankfully, making money last longer is just possible, with the help of a few tips and tricks.
- Embrace seniors’ discounts
It was once said that “it’s better to pay full price than to admit you’re a senior citizen”. Really? Who wouldn’t prefer the extra cash!
Being “senior” opens the door to numerous discounts and freebies.
If you haven’t already, apply for your eligible concession cards, including the Commonwealth Seniors Health Card (for discounted healthcare and prescriptions) and state or territory seniors card (for discounted/free vehicle registration, public transport and other services).
Additionally, many businesses offer seniors discounts – insurers, retailers, attractions and more. But they may not advertise these discounts widely, so it pays to ask.
- Maintain a plan
Having a plan and keeping it up to date ensures you don’t overdraw from super, losing the income-generating power of those funds and running out prematurely.
I prefer a ‘savings and investment plan’, which sounds nicer and is more comprehensive than a ‘budget’.
Incorporate your goals, expenses, assets, and incomes – visibility keeps you disciplined and allows you to act quickly if something is amiss.
- Spend points
Many retirees have held their current credit card, store cards and frequent flyer account for years – decades even. How many points are sitting there unused?
These points generally aren’t transferable, so can’t be gifted in your will. It’s use them or lose them!
Points can pay for everything from groceries to homewares, travel and even your Christmas shopping – conserving your cash and super.
- Get comfortable
Rightsizing your home sooner rather than later has numerous benefits, such as:
- downsizer super contributions tax breaks to boost superannuation earnings.
- paying less for your new home, since property prices generally track upwards whilst investing the extra equity.
- avoiding complications of moving later in life when your health or mobility may not be as good.
- avoiding a mistake - using the time to find exactly what you want, where you want, rather than being under pressure and having to spend stamp duty again
Home ownership is also a major determinant of how comfortable your retirement will be. And given the current state of Australia’s rental market, selling your home to move into rented accommodation could prove costly.
- Retain protections
Protections are typically a cost – insurance premiums, legal fees, memberships etc. However, the cost of not having them in place can be far higher.
Plus, in the case of insurances, prices and restrictions increase with age – meaning you pay more but get less value for that spend, compared with the more favourable terms of a long-held policy.
By all means adjust your protections to suit your current and future needs. But think twice before trying to save a few dollars by discarding insurances or cancelling sports and social memberships that keep you active.
- Update estate planning
Considerable costs (and heartache) inevitably hit a grieving partner and family where someone dies without having their affairs properly in order:
- funeral costs and medical bills pile up if funds haven’t been allocated for them.
- delayed payouts from insurances and super if those details aren’t readily available.
- loss of economies of scale (living costs per person are cheaper for couples than singles).
- unexpected taxes, debts, and liabilities.
- legal conflicts arise where wills are unclear or outdated.
- a person’s wishes may go overlooked or be challenged where guardianships and power of attorney were not devised.
In extreme cases, the surviving spouse may be forced to sell their home to pay associated costs or because they can’t afford to maintain it alone.
- Seek good advice
Just like a good doctor helps you stay physically and mentally healthy, a good financial adviser helps your finances stay healthy, tactically smart and use strategies to reduce tax which stretches your money further.
Be sure their accreditation is up-to-date, and they have experience working with retirees (not just those planning for it during their working years).
Often, the cost of this advice pales in comparison to the tax saved and additional income earned through benefits, structures and plans you never even knew about. What’s not to love about that!
Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au
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