Did you read my recent post on what “they” say is the amount of money needed to retire? (it is here)
When this was originally reported, I said to my husband, “I am sure we could live on the pension as well as Mum & Dad.”
So, we decided to try it. Before making any sort of budget, I tracked our spending for 3 months to see exactly what we were spending, it was surprisingly low 😊
For our “live on the pension plan” we have not taken into consideration our mortgage or my husband’s car. We are working on the assumption that, like our parents, our home will be fully paid off and we will have just one car, which we will have no debt on, but will need funds to update it regularly.
Every week I allocate the correct amount for cash for our budget needs within the confines of only having the amount for the current aged pension for a couple to live on. Bills are direct deposited to their relevant accounts (eg: I send $50 per week to our council for Rates, $50 a week to the Power company etc)
We have lived this way for the past 3 years or so and have not felt we have missed out on much at all. By not spending, we have seen a huge reduction in our debts. (BONUS)
This has spurred us on further to keep going with “living on the pension” for the next few years. We are aiming to be completely debt free in the next 2 years and then sell our businesses and be able to retire early. This of course will require a fairly decent amount of money in the bank, as we are both quite a way off being able to receive the actual pension.
My life of living a “Champagne Life on a (lite) Beer Budget” has been heavily worked with this way of living. Both my husband and I have our own businesses and they both do very well. From the outside, it appears we might splash cash around quite readily, but in reality, we live within our “pension” budget.
I drive a new BMW which my business provides the funds for, there is money put aside in the “pension” budget to upgrade the car. Hubby’s business has work utes that we do not spend a lot on, as they are – well – work utes 😊
We plan on updating the BMW as often as we can well into retirement. We have found that the price of updating while the car has low mileage and is reasonably “new” is quite affordable and within our budget, especially when spread out over 3 years or so.
I love to travel, but our businesses are such that we can really only get away for the odd weekend, Easter and Christmas. I often find great deals for weekends away on daily deals sites that allow us to get away at a reasonable price. I also keep an eye on the airline deals and have been able to snag great deals on flights.
We both enjoy eating out and have a subscription to the Entertainment book each year. Using the vouchers, we can eat at more expensive restaurants than we would normally for half price. We also enjoy cooking, looking at restaurant menus and cooking similar meals at home for a fraction of the cost makes for an afternoon of culinary fun at home. A well stocked pantry and a good bulk butcher nearby, keeps our grocery budget to a manageable level. It is the “grocery” section of the budget that I often find has a built-up surplus. This surplus gets either transferred to savings or put aside for meals out.
Like our parents, we do not “need” anything, so when asked what we want for a gift at birthday and Christmas, I often ask for experience type gifts. Vouchers for cafes, spa treatments etc are happily accepted.
The lessons we have learned from living within the pension amount, is that, for us, it is achievable without any huge sacrifices. Our budget does not include any pension discounts from expenses such as utilities, registration, rates etc, so those will be bonuses if we receive them. We are blessed with good health and are conscious that chronic illness which requires long periods of expensive medications would be a burden on the budget.
Why not look at your own budget and decide if you could live on the pension.