The biggest mistakes to avoid after the Age Pension increase

On September 20, older Aussies across the country received a much-needed boost to their Age Pension payments.

Those receiving the full single rate of Age Pension, Disability Support Pension, or Carer Payment, saw their payments increase by $29.70 per fortnight, while couples on the full pension saw an extra $22.40 each.

While the increase was certainly welcomed, many pensioners say it barely scratches the surface when it comes to covering rising everyday costs, with the ongoing cost-of-living crisis continuing to bite.

Following the announcement, hundreds took to the Starts at 60 Facebook page to share their thoughts — and the message was clear: while every dollar helps, life on the pension is still a financial balancing act.

Even so, any increase is a step in the right direction. The key now is to make sure those extra dollars aren’t lost to avoidable pitfalls — because even small amounts can make a difference if used wisely.

While it’s easy to take that extra money and treat yourself to a small indulgence or let it be absorbed by routine bills and essentials, Carrie-Ann McLean, author of Budget Right: Eliminate debt and improve your financial and mental wellbeing, says it’s worth pausing to consider how best to make it count.

“The biggest trap is letting the increase ‘disappear’ into everyday spending without a plan. It’s easy to treat it as extra pocket money and before you know it, it’s gone,” she explains.

“Another mistake is using the increase for impulse buys or signing up for new ongoing costs, like subscriptions, that eat away at the extra cushion.

“To avoid this, decide before the money arrives what you want it to do for you – whether that’s easing bill stress, topping up a savings account, or giving yourself a small treat each fortnight. A plan gives your money purpose and helps you feel in control.”

McLean also recommends following a simple budgeting method that can help you feel more confident and in control of your money, even on a fixed income.

“One of the most empowering ways older Australians can manage their money is by following the 70/10/10/10 rule. A simple structure that creates balance and control even on a fixed income,” she says.

Here’s how it works:

• 70 per cent of the pension goes towards essentials: rent, groceries, bills, transport, and medication.
• 10 per cent is for “Splash Cash” or “Enjoyment” – something just for you. Whether it’s a coffee with a friend, a puzzle book or lunch out once a month, this bucket keeps the budget sustainable and prevents feelings of deprivation.
• 10 per cent goes into savings or an emergency fund – even $10 a fortnight builds peace of mind over time.
• 10 per cent can be used for giving, gifting, or future goals – whatever matters most to you.

“What’s most important is giving yourself permission to enjoy a portion of your money guilt free,” McLean says.

“Even during a cost-of-living crisis, setting aside a little for joy and connection can make a big difference to mental wellbeing and help avoid overspending down the line.

“By prioritising your spending with a simple structure like this, you stay in control – making your pension work for you, not the other way around.”

While the recent Age Pension increase won’t have older Aussies diving into a bed of cash, with a little planning and some smart choices, even a modest boost can go further than you think.

Read more: How older Aussies can get more from the Age Pension increase

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.