Almost half of over-60s admit to having money struggles even before Covid-19 crisis

Concerning new research shows that 4.2 million working Australians were living hand-to-mouth well before the current Covid-19 financial crisis hit, with older working Australians struggling the most. The findings uncovered that 43 per cent of those over 60 were either reverting to their credit card to get by or had under $100 leftover after paying for the monthly essentials.

The survey of 1,006 Australian adults painted a grim picture of low-income Aussies during this period, with 70 per cent believing their discretionary income would have been lower or the same this year even before the coronavirus crisis.

Why are over-60s hit the hardest?

Helen Baker, a financial adviser at the platform that conducted the survey, Money.com.au, said that the shocking number of struggling older workers stems from several issues, one of which is a flawed pension system.

“The problem with the Age Pension side of things is that it doesn’t really pay that much anyway,” she said. “Rounded up, it pays say $20,000 a year and it’s said that a single person needs $43,000 to live off anyway, meaning the Age Pension is never going to be enough on its own to live off.”

Baker also said that a rising cost of living only worsens the situation for older Australians who generally don’t have sufficient funds to support them in the first place. Electricity and petrol are both big culprits, but the increases become particularly noticeable in the private health sector which increases by 1 per cent every year.

“People over 60 are kind of trapped because they know that this is the time when they’re actually likely to need private health,” she said. “So they want to let it go, but they know they could be waiting years to get into a surgery which means it could affect their ability to work.”

Older Australians in the workforce

The difficulty of entering or re-entering the workforce at an older age also plays a major role in the struggle to gain funds. More often than not, people over 60 are made redundant or need to leave the workforce for reasons such as becoming carers to elderly parents.

When deciding to come back to work, businesses are less likely to hire older workers, meaning it could take much longer than originally planned for those over 60 to secure a new job. Unfortunately, during the time when they are searching for work, older job seekers are forced to dip into their existing funds to survive, while potentially exhausting remaining incomes.

“From my perspective, I couldn’t think of any better people to hire than those in their 60s because you know they’re going to stay loyal to you in five to ten years and they’re not going to retire,” Baker said.

“They’ve come from a generation which are committed to working hard, honourable and not looking for the next job like the younger generation who is used to being able to move quite freely from one job to another. People in their 60s don’t have that same kind of ability, but that’s a good thing because they can stay loyal.”

And although Baker praised the government’s move to increase benefits for job seekers and allow an emergency $10,000 withdrawal of super, she questioned what would happen to the increasing number of struggling older workers once their payments inevitably stopped in six months time.

“Taking money out of super is a great strategy to help people, but this age group is in a position to build super right now, so taking money out actually puts more pressure on them in the long term,” she said. “People in their 40s and 50s have still got time to build and recover. But [those over 60] are on that cusp where they either don’t want to work or can’t work for too much longer down the track.”

Managing finances during Covid-19

Whether you are still in the workforce or have recently left due to job cuts, managing finances may become overwhelming during this time. Money.com.au suggested getting rid of any standing debts while you can if you are still earning money, as well as analysing current expenses and making cuts to non-essential purchasing where possible.

People can also create new income streams from the comfort of their own homes through hobbies like offering music or language classes online or by finding work in industries that continue to move such as online tutoring, childcare and working in groceries stores.

Finally, a financial back-up plan is always a smart idea and can be done by setting aside three to six months’ worth of living expenses as an emergency fund in preparation for the future.