3 ways to ensure finance woes don’t tarnish your golden years

Your golden years are meant to be the best years of your life. You’ve worked hard to build yourself a family, a name and a life, and now in your retirement you get to enjoy it. You can dedicate all of your time to your passions rather than working nine to five. However, ensuring you have the finances to do so can cause a significant amount of stress.

We spoke to a recently retired accountant named Greg* to get his advice on how he’s making the absolute most out of his money during his retirement. “Retiring between the ages of 60 and 67 is hard,” Greg agreed. Here are his three best tips for making sure your golden years aren’t tainted by money woes.

1. Check your eligibility for government assistance

Finding out what and how much government assistance you are entitled to when you retire is paramount to living your best retired life, according to Greg. He recommends having a dig around to find out exactly which programs are available both federally and across your state/territory, then determining whether you qualify for these.

Age Pension

The federal government’s Money Smart website has a handy page that outlines all of the criteria one must meet before qualifying for the Age Pension.

The general rules for qualification are that you must:

• be aged 66 or over, depending on where you were born;
• be an Australian resident, and have lived in Australia for at least 10 years;
• meet the Income and Assets Test.

You can use the Money Smart superannuation and pension eligibility calculator here. The Income and Assets Test works by comparing your income and your assets, and determines how much pension you are eligible to receive.

Your income is measured by the amount of money you receive, including money coming in from employment, pensions, annuities, investments, earnings outside Australia and salary packaging.

Your assets are measured by calculating the number and value of the things that you own, including investment properties, caravans, cars, boats and any business assets you may have in Australia and overseas. However, your primary place of residence is not included as an asset.

Other benefits

Greg also shared that if you receive the Age Pension, even partially, you may be eligible for other benefits, such as Centrepay, Work Bonus, or the Pensioner Concession Card.

Centrepay is a free service through Services Australia that acts an automatic redirect of funds to pay bills and expenses by way of deductions from your overall pension amount. You can find out more here.

According to the Services Australia website, Work Bonus “can help you earn more income from working, without reducing your pension”.

Concession cards

Greg also recommends that those looking to retire or those newly retired look into their eligibility for concession cards, as they are “great value and make your money go further”.

According to Services Australia, you can qualify for the Pensioner Concession Card if you are aged 60 or over and receive a payment from Centrelink. This card can give you great deals and discounts, including:

• cheaper utility bills;
• public transport discounts or free rides (according to your local government area);
• health care discounts.

An alternative to the Pensioner Concession Card is the Seniors Card. This card provides:

• discounts on public transport (depending on your local government area);
• provide discounts on some goods and services.

The rules for qualifying for the Seniors Card vary from state to state. You can check the eligibility criteria for each state here:

• Australian Capital Territory
• New South Wales
• Northern Territory
• Queensland
• South Australia
• Tasmania
• Victoria
• Western Australia

The Commonwealth Seniors Health Card is a concession card provided by the federal government, which assists in covering the health costs often associated with ageing. This card includes access to prescriptions at a cheaper price via the Pharmaceutical Benefits Scheme and to cheaper appointments.

To be eligible for this card, you must:

• be of pension age;
• meet the income test requirements; and
• not receive any Centrelink payments.

Government Loans

Additionally, Greg shared that should you qualify for the Age Pension, you may also qualify for loans from Services Australia.

According to the Services Australia website, the Pension Loans Scheme “uses real estate as security for a fortnightly loan to top up your retirement income.”

As a receiver of the Age Pension, you may also qualify for an Advance payment. Advance payments mean “part of your pension payment in advance to help cover immediate expenses.”

2. Speak to a financial planner

Another thing Greg strongly recommended for anyone freshly retired or looking to retire, was visiting an independent financial planner. He shared that “visiting an independent financial planner – someone with no vested interest in your finances – was the most important step any retiring person can take”. Greg shared that financial planners will sit with you and have a “morbid-but-honest” conversation about your future, including detailing any health concerns that may impact the length of your life.

“They will do some calculations to determine your predicted life expectancy, and work out a budget you can stick to, while living comfortably,” Greg shared.

Greg’s independent financial planner determined that with his income and assets and his eligibility for the pension he had enough money to live comfortably – eating and drinking as normal and undertaking leisure activities of his choice – until the age of 91, as long as he stuck to a budget.

3. Employ practical processes

Track your expenses

Greg recommended that the best way he has found to stick to a budget is by employing practical processes to track expenses. “It’s very, very important to have some sort of financial management tool,” Greg shared.

He shared that he tracks all of his expenses in a Microsoft Excel spreadsheet. Greg tracks each expense according to the category of the spend, and tracks his spending by day, collating the spends in monthly tabs. He keeps a running year-to-date amount that he has spent on each tab, to ensure he knows what he has spent, and ensure he doesn’t go over his budget.

Greg also noted that some banks have features now that track your spending by category on their mobile apps.

Set up automated payments of recurring costs

Greg shared that setting up automated payments of recurring costs, such as registration, utility bills or other predictable expenses really helped him as he entered retirement.

He added that he had worked out an average amount that each bill costs when it comes in, and he has an automatic direct debit set up, where that predetermined amount is paid just as each bill comes due. Greg gave an example, “I worked out about how much my electricity costs each time the bill comes, per month. Now I have a system that automatically pays that average amount each time it comes due. This time when the bill came, I was $187 in credit.

“It makes you feel at ease to know that [your bill] is covered. It gives you a big smile knowing you don’t have to work out how to cover the bill, find the money or stress about it at all.”

*The recently retired accountant we spoke to for this article wished to keep his identity anonymous but agreed to be referred to as Greg.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.