Looking forward to retirementis this as good as it gets? · ACOTA / ASFA / Ageing Agendas 2000 4 outdated motor car, which is important for mobility. People entering retirement do

ACOTA / ASFA / Ageing Agendas 2000 1

Looking Forward toRetirement……….

Is this as good as it gets?

December 2000


Contents:

1. Foreword

2. The Study and Sample

3. Preparing for Retirement

4. Expectations of Retirement

5. Current Experiences of Retirement

6. How the sample compares to the widercommunity

_________________________________________Appendix A: The SurveyAppendix B: Detailed Expenditure Profiles

For further information contact:

Philippa Smith, CEO, ASFA (The Association of Superannuation Funds of Australia Ltd)PO Box 1485, Sydney, NSW, 1005Telephone: (02) 9264 9300 Fax: (02) 9264 8824 E-mail: [email protected]

ASFA Website address: www.superannuation.asn.au


1. ForewordOlder people need an adequate retirement income. The current system does not providesufficient income to meet future needs and expectations.

To date, there is no agreed ‘adequacy’ target. There is a growing concern that the current threepillars comprising our age pension, compulsory savings through superannuation, and othervoluntary savings – will not provide for our increased longevity, the numbers of years likely inretirement nor the increased expectations of babyboomers and future generations.

From a public policy perspective, it is important that we can agree on an adequate andsustainable target. Over the next couple of decades more people than at any other time inAustralian history will retire. We have no time to lose. It takes time for policy changes andimproved savings strategies to be fully implemented and to deliver their anticipated benefits.

The policy questions involve a realistic assessment of living standards and future expectations,together with strategies that ensure sustainability of funding and equity for future generations.

This ResearchThis research was undertaken by ASFA with the cooperation of the Council of the Ageing(Australia), the peak community organisation for older persons. The interviews wereundertaken by Ageing Agendas. The research examines some of the dimensions of ‘adequacy’and retirement income from an individual perspective. It is largely qualitative in its nature, butthe research also includes quantitative analysis based on survey and other measures of livingcosts.

Thirteen face-to-face interviews have been undertaken to date with consumers who have beenin retirement for periods of between two and ten years. We sought a mix of retirees ondifferent incomes and with different experiences on their path towards retirement.

We asked the respondents to complete expenditure records. We also sought to compare theexpectations of retirees against the reality of their experience.

There is no one story. People come from different backgrounds with different opportunities tosave for retirement and that helps to shape their expectations.

But there are also some clear messages. Planning for retirement is important.

Retirement can either be a compromise or a liberating experience. Where retirement planninghas been undertaken, and a person has been able to work up to normal retirement age,retirement can be a period free of restrictions and fulfilling for the individuals concerned.

Where these plans have been disrupted (eg poor health, unemployment or forced earlyretirement) our retirement stories document just how frustrating and disappointing that can be– even for those with relatively modest expectations. If retirement savings are inadequate, orsaving plans are disrupted, then retirement can become a period of virtual imprisonment.

Some of the stories touch on other factors. Living standards are greatly affected, where theretiree is in inappropriate housing; is not able to replace household durables; or relying on an


outdated motor car, which is important for mobility. People entering retirement do not predict,or cannot predict, their health (and the associated costs).

Issues of housing, transport and health care are all related and basic to the questions ofadequacy and independence in retirement. So too is the issue of age discrimination if we are tomaximise the opportunities for people to work up to customary retirement age and, if desired,beyond.

One of the most significant issues in discussing ‘adequacy’ is to what extent do ourbenchmarks and targets need to change.

‘Adequacy’ is about expectations and our ability to participate in the society in which we live.Even within the sample profiled in this report there are significant differences between theattitudes of those who had been in retirement for ten years or more, and those who had recentlycome into retirement. It is likely that the babyboomers and future generations will have higherexpectations again.

Section 6 of the report explores some of these issues together with some benchmarks as tolifestyle and needs. Luxuries of the 1970’s are perceived as necessities by the babyboomers.

As reflected in these stories the nature of expectations and the nature of loss anddisappointment can be quite dramatic if people don’t have enough for retirement.

Other ResearchIn October 1999 the ASFA Research Centre’s discussion paper Achieving an AdequateRetirement Income – How Much is Enough? was released. This paper examined a number ofbenchmarks and implicit assumptions that have been used by Treasury’s Retirement IncomeModelling group (RIM group), financial planners, the UNSW Social Policy Research Centre,and a number of occupationally based schemes.

ASFA has also commissioned a series of quantitative research through Wirthlin WorldwideAustralasia about community attitudes towards superannuation and expectations for retirement.

The quantitative research in October 2000 highlighted that the current level of Super Guarantee(SG) savings will not meet even minimum expectations. The SG is due to rise to 9% in 2002.For someone on average weekly earnings a 9% SG contribution (after 30 years employment)would result in a retirement income of around $19,000 per annum in today’s dollars. Thisincludes the payment of a part age-pension.

Only four per cent (4%) of respondents believed that less than $20,000 pa would be adequate.

Eighty per cent (80%) of workers believe that $20,000 - $60,000 would be the minimumincome per annum (in today’s dollars) to maintain an adequate income lifestyle in retirement.

In releasing the research ASFA noted that the government needs to either change people’sexpectations or put in place public policy strategies to encourage savings for retirement thatbetter meets expectations.


ConclusionThese are issues that the community, superannuation funds, and the Government needs toconsider if we are to achieve an adequate and sustainable retirement income strategy for thegrowing numbers of future retirees.

As individuals with increasing longevity we need to plan for this increased period – andopportunity – of retirement. What level of income is necessary to provide a life and lifestylethat is “adequate” and satisfying?

What is adequate and sustainable from a community perspective? Setting a realistic target andbenchmark is necessary from a public policy perspective. Ensuring an adequate andsustainable retirement income strategy is likely to involve decisions about the level of the agepension and its interaction with private savings, the level of compulsory savings, andincentives for voluntary savings (and the maximum limits beyond which concessions may notbe payable).

Other Government policies and strategies will also be necessary if we are to strip away some ofthe other barriers that currently inhibit savings for retirement. The high level of agediscrimination in the workforce is one of those issues, which need to be reversed if we are toachieve an adequate and active older age.

A coordinated and longer-term view and strategy is needed.

PHILIPPA SMITH DENYS CORRELLChief Executive Officer, ASFA National Executive Director, COTA

JOHN BARBERDirector, Ageing Agendas


2. The Study and SampleAgeing Agendas was engaged by ASFA to undertake research into retirement incomeadequacy. With the assistance of COTA Australia, retirees were recruited to participate in faceto face interviews. Approaches were made to COTA members who resided in a range ofselected areas in NSW. The areas chosen were:

Sydney Metropolitan AreaAshfield Randwick/CoogeePymble KingsfordHornsby/Thornleigh

Regional AreasPort Macquarie Young

A letter of invitation with a brief questionnaire was sent to all COTA members in these areas.The questionnaire was designed to provide a brief profile of the respondent to assist in theselection of subjects demonstrating a variety of characteristics in retirement. A copy of thesurvey form is contained in Appendix A.

Participants were asked to provide specific information on their expenditure. In preparation forthe interview, an expenditure record form was sent and participants were asked to try tocomplete it prior to the interview. Participants were given the option of providing informationon the amount that they spend on particular items per week, per quarter or yearly depending onwhich was the easiest for them. Subjects were offered $100 if they agreed to participate in theinterview.

39 responses were received from retirees in Sydney, with six from retirees living in PortMacquarie and one from Young. 21 retirees in Sydney were approached regarding aninterview. 8 of those contacted were unavailable in the time frame for interviews or changedtheir minds when they heard about the nature of the information required of them. As aconsequence 13 interviews were held in the Sydney Metropolitan Area. These form the firstwave of interviews of the study and on which this report is based.

Participants were selected with the aim of identifying a range of experiences of retirement.Participants were chosen so as to reflect :

♦ Different incomes in retirement;♦ Different periods in retirement;♦ Different living arrangements;♦ Different genders; and♦ Different health status.

There was no knowledge or indication of the person’s expectations of retirement whenparticipants were chosen for the study.


Demographic Characteristics

Gender (Includes couples)Male 7Female 10

Living CircumstancesLives alone 9With Others 4

Age (Includes couples)60-64 165-69 570-75 276+ 9

Rent 2Own 11

RetirementPlanned 7Unplanned 6

Period Since RetirementLess than 5 years 26-10 years 5More than 10 years 6

Retirement Income SourcesPension – full 5Pension – part 4Super 3Investments 8Other (broader, UK pension, 2employment)

Health ProblemsYes 7No 6


3. Preparing for RetirementIndividuals follow considerably different paths on their journey to retirement. Some have hadthe benefit of well-paid jobs with employer-sponsored superannuation, while others have beenself-employed and others have had lowly paid jobs without superannuation. Some make theirhome their major retirement asset and trade down in order to fund their retirement, while aminority cannot afford to purchase a home before retirement.

The research revealed a range of attitudes and behaviours in preparing for retirement.

♦ Mr C is 76 and retired in 1989. In 1973, as a single wage earner at the age of 49 herealised that retirement was not that far away and he commenced a retirementsavings strategy which involved the purchase of investment properties andincreased contributions to his superannuation.

♦ Mr X was a self-employed builder. He and his wife always had a deliberatestrategy of investing in their homes with the intention of trading down when theyneeded to obtain a lump sum to invest in an income stream.

♦ Ms R was a school psychologist and as a member of the Department of Educationwas a member of superannuation fund all her working life. She made the point thatshe had no choice in the matter in the beginning but decided it was a good thing andalways took on extra units when she became eligible for them.

Others were constrained by their incomes and expenses, together with their experience in theworkplace.

♦ Miss N is 79. She worked as a nurse and retired in 1988. On a nurse’s income andas a single woman she was not able to buy a home. She also had periods when shedid not work. She did not receive any superannuation.

It is axiomatic that the pre-retirement experience establishes the basis for retirement lifestyle.The thing that may surprise many is that planning for retirement, when it occurs, may notmatch reality.

In the case of two of the interviewees, health problems intervened to bring on retirement beforethey would ever have expected it and health problems denied them the pre-retirement period inwhich many people begin to undertake their retirement preparations.

♦ Mr. G was a bricklayer but ill health forced him to stop work at age 48. Accordingto his description, life was very tough for a while.

Mr and Mrs G admitted that they did not think much about retirement because itwas forced on them. They had originally had a lot more plans such as buying acaravan and going around Australia.

‘If he’d worked till 65, we probably would have been able to afford to (do thingslike go around Australia), but having not worked for the last 15 years we lost thatmoney.’


♦ Mr E’s plans for retirement were disrupted as serious health problems emerged inhis mid-fifties. He worked as a Customs Officer for 35 years and was on an incomeof $50,000 per annum before poor health forced his retirement in 1990 at the age of55. He had planned to work for at least another three years before retiring.

As a Commonwealth public servant Mr. E was entitled to superannuation but hisforced early retirement had a significant impact on his capacity to meet hisretirement expectations.

In contrast to Mr E. some retirees have the opportunity to work on beyond 65.

♦ Mr and Mrs B are 83 and have been fully retired for 8 years. They worked inadministrative and clerical jobs and Mr B worked as a driving instructor in lateryears. They worked part-time until their mid 70s, receiving a part-pension after agepension age.

Amongst those interviewed there were also retirees who had decided to make the most of theiropportunities prior to retirement rather than save for retirement.

♦ Mr. and Mrs. M worked in the performing arts. He is 67 and effectively retired 8years ago. She runs a small part-time business. Before retirement they consciouslydecided to spend money on overseas trips and not to ransom their current lives fortheir future ahead of putting more money in superannuation or savings.

Some retirees’ circumstances are influenced by the pre-retirement decisions of their departedpartners.

♦ Mrs S is in her late 70’s and has been widowed for 13 years. Before retirement shewas on an income of $300-$350 per week in hand for the last 10 years. Her partneralso earned a reasonable salary. She and her husband enjoyed a very comfortablelifestyle during this period and her husband would spend whatever he liked inhaving a good time. Her husband died in 1987 leaving her with considerable debt.Mrs S sold their house and was able to pay off their mortgage and buy a unit. Withthe money she had left over she paid off the debts her husband had accrued.However, she had no savings.

Mrs S explained that she never had time to think about retirement. She had alwaysbeen busy working or looking after the family and then caring for her husband andcontinuing to work. However, she did reveal that, in fact, she did not expect toever retire. Because she worked in a family business and she enjoyed working:

I always thought I’d work ‘til I dropped.

Mrs. S retired suddenly in 1989 when the relative’s business collapsed.


4. Expectations of RetirementThe research indicated that the expectations of retirees affect their satisfaction with theirlifestyles and their views of the adequacy of their incomes. This is consistent with the pointmade by the Social Security Review as long ago as 1988 when it was noted that ‘a bettereducated population with higher savings and different expectations of retirement’ may be moreimportant for retirement incomes policy than the oft quoted dependency ratio issue.1

It should be noted that most of those interviewed were of the generation whose expectationswere shaped by depression and war and as a result, they are more likely to settle for less thanmembers of the baby boom generation and their children. It is important to consider whenreading these ‘stories’ of retirement, whether the lifestyles they lead would be considered anacceptable goal for our own retirement.

Those with low pre-retirement incomes are inclined to have lower expectations than those withhigher incomes.

♦ Miss P is 79 and worked as a typist/secretary on a low income. She did not receiveany superannuation. When she was in her mid 50s she inherited her sister’s houseand that enabled her to buy the unit in which she lives. Previously she had rented.As a single person she knew she would not be able to depend on anyone else inretirement. She saved $50,000 while working. Her retirement income is $10,000(slightly less last year) and she estimates that her expenditure is around $8600.

Miss P said that she has not had to cut back in retirement. She cannot identifyanything that she would like to do but cannot afford. She is quite happy with whatshe does.

‘I realise I have to live on the pension and I just live within my means.’

While Miss P’s expectations of retirement were consistent with her modest workforce lifestyle,Mr E, whose premature retirement was brought on by ill health, spoke of his frustration inhaving to compromise on many of the things he had anticipated doing in retirement.

♦ Prior to retirement, Mr E regularly travelled overseas, led an active social life andwent on tours with the sporting clubs with which he was associated. When heretired he estimated that he would need $26,000 per annum to meet hisexpectations. However, his superannuation pension was only $18,000 pa andbecause of his age, he was not entitled to a Government pension.

The low level of retirement income meant that Mr E had to give up travel, reducehis social activities, reduce his spending on food and clothing and at times whenlarge bills arrived, run up a debt on his credit card to make ends meet.

At the other extreme there are those like Mr C who retired with superannuation, propertyinvestments and shares.

1 Foster. C. 1988. Towards a National Retirement Incomes Policy, Social Security Review, Department of

Social Security. P 55.


♦ Unlike retirees such as Miss P and Mr E, Mr C does not keep track of his spendingeach week because he said he doesn’t need to.

It’s not an issue. … I wouldn’t know what I spend at the supermarket or on(restaurant and club) meals and things.

He is also a member of two wine societies, subscribes to the Ensemble theatre,subscribes to magazines and buys new electrical equipment such as a stereo TVwhen he feels like it. It is estimated that Mr C spent around $30,593 per annum.

I pay the day to day costs out of the X bank account (where the rent from the GoldCoast unit is deposited) and pay the bills from the Cash Management account.Sometimes I put them on my credit card and pay it off out of that account beforethe due date.

♦ Miss N estimates that she spends around $16,000 per annum, about half that of Mr.C. Maintaining a car and paying private health insurance are very high prioritiesfor her, and she reported that she would cut back on other things to keep them.

‘My car is my life line as I don’t have friends with shared interests in the(retirement) village.’

She has a strong interest in cultural activities but cannot afford to go toperformances very often. She is able to go to the movies about ‘two or three timesa year’ and to the Opera House once a year. She indicated that she would‘certainly’ like to be able to go to the opera, ballet and concerts more often. Shealso likes eating out ‘somewhere nice’, but indicated that she cannot afford to doeither very much. She also gave up buying books because she cannot afford to buythem any more.

♦ Mr X was looking forward to retirement since he found work physically drainingand he had prepared well financially. He and his wife traded down their home andinvested $300,000 after buying another smaller home. They chose a place within ashort walk of a major shopping centre, close to buses and trains and he believed thatthey were well set up. They had money to travel overseas and a caravan in thebackyard to allow them to travel around Australia. Unfortunately, Mrs X died ofcancer not long after he retired and as a result, Mr X finds that his retirement is verydifferent to what he had expected.


5. Current Experiences of RetirementThe incomes of those interviewed ranged from $11,046 to $27,300.00 per annum while theannual spending was between $8,900 and $30,600. Nine of the 13 consumers interviewedreceived either a full or part age pension as part of their retirement income.

LifestyleAs noted above, Mr C who had benefited from employer-sponsored superannuation over aperiod of 35 years and who decided in his 40’s to invest in property for his retirement,maintains a lifestyle where he experiences no limitations arising from his income.

Two other participants whose expenditure was approximately $21,000 indicated that theyconsidered that they were very comfortable, did basically what they felt like and had savingsthat they could use if they wanted anything else. However, this was not the case for themajority of those interviewed.

Most retirees recognise that they are living from a pool of resources which generally cannot betopped up. More than half the sample keeps a written record of all expenditure as a way ofmanaging their financial situation. Surprisingly, there are those who are saving in retirementthrough living a very austere lifestyle. In part the motive appears to be to ensure a reserve forcontingencies. Many of those interviewed noted that their retirement assets had to last themfor an unknown period where uncertainty about health and other factors breeds considerablecaution.

Despite this concern, many are dis-saving.

Making Ends Meet♦ Miss P (expenditure around $8600/income about $10,000 pa) lives an austere

lifestyle. Her social life revolves around the many clubs and groups that shebelongs to, the voluntary work she does and going to bingo and indoor bowls. Sheeats at clubs fairly often spending around $7 for a meal. She considers $10 toomuch to spend on a meal.

She spends very little on food and grocery shopping as she often eats while she isout. She also gets fruit or meat when friends win fruit trays or meat trays at bingoand divide them up. She has not had to buy washing powder for 3 years since shewon a lot once at one of the clubs. Her spending on food and shopping has notreally changed in retirement.

Miss P does not consider that she has had to cut back on spending in retirement.She lives within her modest expectations. There is nothing she would like to dobut cannot afford to. Yet she considers $10 for a hot meal at some clubs excessiveand therefore avoids going to those clubs for meals. She is proud that she hasfound the Bronte RSL club which only charges $3 for a hot meal. She is quitehappy with what she does.

‘I realise I have to live on the pension and I just live within my means.’


♦ Mr and Mrs G were forced into early retirement when Mr G suffered healthproblems. Their total retirement income is around $16,000 per annum. They nowconsider themselves better off financially than prior to retirement. Having had nosavings at all and no superannuation, they now have about $7000 in the bank,including the recent tax reform payment of $2000. Also they received someNRMA shares, which they spent on a new air conditioner (which he needs for hishealth).

‘We’re very fortunate, we’re always a little bit in front in the bank. It soundsridiculous but we’re saving on a pension. Just a little but it’s mounting up.’

‘We’ve never been so well off in all out lives. We manage. We don’t want a lot outof life. We don’t go extravagant. We haven’t bought any new furniture oranything. We’ve just made do with what we’ve got.’

Feeling isolated and doing without♦ Mr E’s expectations of retirement are not reflected in his experience. His

expenditure is estimated to equal his income of around $18,000 per annum (at thetime of retirement). After a short period in retirement, Mr E discovered that thiswas not enough to meet his expectations.

‘I found I couldn’t do anything or go anywhere.’

He estimated that he required at least $26,000 per annum to meet his expectations.He believed that his expectations were not unreasonable.

‘But once you retire you realise how expensive it is. You find you haven’t got themoney to do the things you want. I used to travel overseas once a year and I had togive that up. I also tended to drop out of sporting activities where they organisedtrips away because I couldn’t afford to go.’

Mr E also considers that his social life has become less active in retirement. Hereported that he had to be careful when he goes to his local Club.

‘When you’re on a wage and you go to the Club you’ve probably got $100 in yourwallet. When you’re retired it might only be $10. You have to avoid being part ofa ‘shout’ and just have a drink by yourself and then head home’.

The restrictions were so significant and the experience so frustrating that in 1992(two years after his health caused retirement), he resumed working, this time as asecurity guard at a golf club. With the $18,000 superannuation pension and thewage from the full time job, his lifestyle returned to normal for a time. However,he found that his health began to deteriorate and he was only able to remain atwork for four years. Thus he retired again in 1996 at the age of 61. He did notmanage to save anything much during this period.

He now tries to live on $400 per fortnight for food and other day to day expenses.However he usually finds that he can’t get by on this amount and has to draw onreserve funds or use his credit cards (Visa and Mastercard). He also has a creditfacility with CitiBank. He often found that he was paying high interest and stated:

‘Sometimes I had to rob Peter to pay Paul.’


Mr. E was divorced some 20 years ago and said that he found going out withwomen to be too expensive in retirement. His advice was to get married beforeretirement because you can have a relationship without the cost of social outings.

Mr E estimated that he spends around $50 per week on food. He buys ‘No Frills’brands because of the savings but considers that some of the products are not of thesame quality as the brand varieties. He said that the biggest food expense camefrom fresh fruit and vegetables, where he said it was easy to spend $20 per week.

Because of his poor health he maintains health insurance at a cost of $112.00 permonth. However, he said that there were occasions when he decided not to havesome of his less significant prescriptions filled because of the cost:

‘There were times when you know that if you have the script filled, you won’t beable to go to the pub.’

Mr E estimated that he was spending around $100 per month on prescriptions andother medicines. On his very limited budget, he often had to balance his healthneeds with his need to maintain his social networks.

Mr E also indicated that his financial position placed limits on what he had tospend on clothes and gifts. He indicated that he shopped for inexpensive clothes.He also said that he had to restrict what he spent on Christmas and birthdays giftsfor family. He indicated that he did not feel comfortable with this.

♦ Mr and Mrs M also place restrictions on themselves when they go to thesupermarket. When shopping they buy specials. They do splurge but only everycouple of months or so. They would buy more mangos and nice fruit, expensivecheeses ‘but you can live without all that stuff’.

Mrs B thought that she would get a part time job in retirement to help them makeends meet, but that did not materialise. At the time she said that she looked a lotyounger than she was.

‘I don’t ask for help (financially). I am sure my daughter would (offer) if shethought I needed it, but I always say I don’t need it. I don’t want to be beholden toanyone. All my life I have been independent and in my old age I want to stay thatway.’

She would recommend people approaching retirement to keep working as long aspossible.

Finding ways to cope – sometimes illegally♦ Mrs S. believes that no one could possibly live on the Age pension without some

extra income. After retiring with around $7000 in superannuation and the full Agepension, Mrs. S realised that she needed to supplement her income. She was able topick up a job for 2 days a week which earned her $80 per week. She reported theincome to Social Security and found that they reduced her pension by $40 perweek. She gradually used up the money she had invested and found living on the


pension difficult. Because she found it hard to manage, she stopped declaring theextra income she earned.

A few years ago she started taking in a boarder. She now has a boarder for about20 weeks each year. She provides full board which includes breakfast and dinnerfor $300 per fortnight. This provides an essential boost to the $377 she receivesper fortnight from the Age pension. Her annual income is approximately $15,800per year.

Mrs. S tries to live on $1,000 per month. However, when she has an expenditureshe cannot pay she puts it on her credit card. The $1,000 includes all expensesexcept for her credit card repayments which are around $400 per month and alsoholidays and car breakdowns. She keeps a record of everything she spends moneyon.

She is aware that her expenditure exceeds her income from time to time and as aresult she has a continuing credit card debt. Mrs. S considers that

… because of the lodger I can live very much as I’ve always lived. If I had thepension only, I couldn’t run a car. I’ve got grandchildren, I like to buy thempresents, I give to charity.

She also rationalises that her children will be able to sell her flat when she dies andpay off any debts she still has.

Mrs S considers it essential that people enter retirement owning a place to live.She felt that her mother had been pressured into a nursing home before it wasreally necessary, by a landlord who was concerned about his liability if she fell andhurt herself. To Mrs S it is a great comfort to own her own place. She said that ifyou have no money you can let it deteriorate, but you still have a place which isyour home.

Coping with the UnexpectedRetirement can last for a long period of time and the utilities that seemed quite adequate at thetime of retirement can wear out.

♦ Mr and Mrs M revealed that they have had to fix or replace several householditems, including the stove, fridge, freezer, vacuum cleaner and microwave which all‘packed up at once’.

There are things that they used to just pay for when they had the income coming inbut which they do not do now. Some of things are just deferred.

‘Getting the floor re-polished, but that’s not an option for a while.’

They think that they should really be spending more on upkeep and if they had anextra $5000 it would go on the house. Mrs. M also thinks they need a new washingmachine.


They find the September/October and Christmas periods difficult financiallybecause several bills come in at once. Christmas is present buying time, plus herbusiness (part-time dance teacher) does not bring in any income over January.

Most participants in this research experienced bills that were somewhat unexpected, whetherfor replacement of essential household items, a car or medical or dental work. They revealed arange of ways of coping with these.

Credit or relying on charity?♦ Mrs S has to replace her fridge and for the first time in her life will buy a second-

hand fridge and use her credit card to pay it off. When she needed to buy an oldcar, she had to borrow $10,000 from a relative which she is gradually paying back.She also had a gall bladder operation which left her with $500 worth of bills eventhough she had private health insurance. She wrote to the doctors concerned andindicated her financial situation and most agreed to forego their fees.

The credit card appears to save the day for many retirees who live on a tight budget. Thisallows them to spread expenditures over time or maintain a running debt.

HealthHealth status is another significant influence on the retirement experience of individuals. Adeterioration in health brings with it greater pressures on income.

♦ Mrs. B has developed considerable health problems, walking is difficult and she hasbecome somewhat immobile in the last year. She can no longer walk up the hillfrom their unit so can only go out if she drives. Her husband had a brain tumourand as a result lost his drivers licence. He can walk to the shops but she does notlike him carrying things, and he is forgetful.

She still drives. ‘If I didn’t have the car I really would be housebound.’ Theywould like to move to somewhere on the level, near a bus stop and with a niceoutlook but cannot afford to. They did not realise when they bought the unit 12years ago how steep the hill was and how significant this would become.

Mrs B has had to cut back on a lot of things that she would like to have continueddoing. She used to be a subscriber to the opera, ballet, theatre and concerts butcannot afford to do these any longer. If they had more money, her first prioritywould be to move to a better location so that she could get out more, plus sherealises that she will not be able to drive indefinitely.

‘It’s very hard for me to admit that I don’t buy books because the job that I had forthe last 12 years was with a publishing company.’

While Mrs B has the paper delivered, she said that she has to rely on her daughterto pass on her old magazines so she keeps up to date with what is happening in theworld.

Health considerations also dictate spending priorities for Mr and Mrs G.


♦ They have a 13-year-old car. They go out nearly everyday somewhere, to the shopsor ‘wherever’. They could not do without the car for shopping, and Mr. G said hewould be housebound without the car.

Whatever happens we must afford to run the car. If it came to it we would have togo without other things. We haven’t had to yet though.

The cost of health care can also be a nasty shock.

♦ Mr and Mrs B have hospital insurance costing about $100 per month. She had ashort spell in hospital recently and knew she would have to pay an excess chargefor the hospital but did not expect the gaps charged by the surgeon, anaesthetist andothers. The surgeon waived his $500 gap when she said she could not pay it but thetotal gap from that one episode in hospital was still $530. She paid the bills at thevery last moment.

♦ Mrs Z (82years) is planning on moving to a retirement unit in the near futurebecause she finds it increasingly difficult to cope without having to ask people to dothings around the house for her. She found that the value of her modest butcomfortable fibro home would not cover the cost of many retirement units. She hasfound one that she can afford and considers that it is ‘not the best’ but has decidedthat she will make it do in order to maintain her independence.

ConclusionsThese ‘stories’ point to the importance of the expectations people have of retirement and theirunderstanding of the size of the retirement nest egg which will be required to support them.The stories also point to the fact that there is no such thing as a ‘normal’ retirement. Individualcircumstances before retirement and the degree to which they saved for retirement dictated thenature of the retirement experience.

Some retirees whose experience of the workforce had been in lowly paid positions came intoretirement with very modest expectations. Two such stories reveal people living quite austerelifestyles and saving while in receipt of the age pension.

For others their expectations have tended to be higher and their disappointment greater wherecircumstances have denied them the opportunity to achieve their objectives and / or they do nothave the income to achieve the lifestyle they had hoped for.

The key lesson from these stories is that planning for retirement should be undertaken earlyand focus on defining the expectations that individuals have for retirement. It should thenidentify the accumulation strategy and policy parameters that will deliver the desired result.While these stories reveal that some simply did not have the opportunity to save for retirement,the Superannuation Guarantee will provide a better future than was the case for many of thoseinterviewed. The question remains will it be sufficient to meet the expectations of futuregenerations?

The interviews also illustrate that the nature of loss and disappointment arising from frustratedretirement expectations is not limited to grand retirement plans, such as the trip aroundAustralia in a caravan or the overseas trip. One of the retirees told of the loss of socialnetworks when he could no longer participate in a ‘shout’ at the club or the pub because he


couldn’t afford to shout when his turn came around. He also described how he would not havesome of his necessary prescriptions filled because that meant he would not have enough to goto the club with his mates. Another told of the fact that she no longer bought books and reliedupon her daughter to provide her old magazines so that she could keep up with what’shappening.

These stories reveal that retirement can be a daily compromise where individuals keep a closetrack of spending and watch every penny as they preside over a shrinking horizon of reducedopportunities. Conversely, it can be a period of liberation and expanding horizons as theretiree is freed of the bonds of work in possession of the means of meeting their retirementexpectations.

The stories also reveal that retirement is not a static period of life. If retirement savings areinadequate to cope with the changes that are at times imposed on retirees, they can sentencethem to a veritable period of imprisonment.

Changing health status and / or the provision of community services and support is the mostobvious of these changes. Health costs involve not only the direct cost of treatment and thefear that one has to pay for health insurance, but also the impact that health problems have onthe spending and activities of retirees. Even in this small sample, there are retirees whoselifestyle is dictated by the spending consequences of health conditions. There is the couplewho feel like ‘prisoners’ in their current housing but can’t afford to move and another couplewho rely upon a 13 year old car to get them to the shops and provide the outings for thehusband with chronic breathing problems. If the car breaks down they will have to go withoutother things to have it fixed or the husband will be housebound.

These retirement ‘stories’ indicate that even with modest expectations, retirement can befrustrating and disappointing if the right preparations have not been made.

Conversely, where retirement planning has been undertaken and the retiree has followedthrough with commitment to a retirement strategy, retirement can indeed be free of restrictionsand fulfilling for the individuals concerned. These retirement stories provide a benchmark forcomparison for all Australians with their retirement ahead of them.

What standard of retirement lifestyle will you be satisfied with and what plans do you need tomake to ensure that it is achieved?


6. How the sample compares to thewider communityThe sample of retirees dealt with in this study is both similar and different to the community asa whole, and the aged population in general.

Average income of the sampleThe households sampled fall squarely with the lowest 20% and lowest 40% of the incomedistribution of Australian households as indicated by the 1998-99 Household ExpenditureSurvey (HES) published by the Australian Bureau of Statistics. A number of those surveyed,particularly single, older women, had incomes around the $10,000 mark. The corresponds tothe lowest 20% of the income distribution. Most couples and some single males in the samplehad incomes around or in excess of $20,000 per annum. This corresponds to the lowest 40%of the income distribution.

The incomes of those in the sample are not dissimilar to the aged population generally. Mosthouseholds consisting of individuals aged over 65 fall within these income bands. Singleperson households consisting of a female aged over 80 almost always fall within the lowest10% of the income distribution. If anything, the sample has household incomes which are alittle above the average for the aged population as a whole.

How the aged population (and our sample) differs from the average expenditures of the variousincome groups documented in the HES is that the aged generally will remain amongst thelowest income distribution profile for the rest of their life. Many other households in thelowest 20% and 40% of the income distribution are of working age and are likely to be lowincome for only a relatively short time. Unemployment, illness or a range of other factors canlead to a temporary reduction in income. Such households are able to draw down on financialresources during the period of temporary decline in income. For the lowest 20% of the incomedistribution, expenditure on average is over twice annual income, and for the next incomequintile expenditure also exceeds income.

For the aged, low income is not a temporary event, and there often are no financial resources todraw upon to supplement the purchasing power of the household’s income. The income atretirement is as good as it gets, and with increasing age both income and expenditure decline.

Composition of household expenditure by the agedThe results of this study indicate that the aged have expenditure patterns which differ markedlyfor the average for the population as a whole or even the population more generally withsimilar income levels. Equally, the aged in the sample do not have the neat and balancedbudgets that the University of New South Wales Social Policy Research Centre assumed incompiling its indicative budget standards for aged households. Some expenditures by the agedare higher than commonly understood, others are lower, and some necessary or importantexpenditures are either neglected or the cause of financial crisis for the aged.

For instance, housing costs remain a significant item for both owners and renters for thehouseholds in the sample. Housing costs of 20% or even more of total income were not


uncommon among homeowners in this sample, particularly those required to pay strata fees ormaintenance levies. Property expenses of between $2,000 and $4,000 per annum were notuncommon, and could be up to 20% of income. For owners of detached housing, homemaintenance can also add up to a significant proportion of what are very modest householdincomes. For a number of the households in the sample, unexpected home maintenance needslead to difficult to manage credit card bills or a drawing down of already modest savings.

A second item which is more substantial in our sample than suggested by the HES and theSPRC indicative budget standards is the cost of transport, particularly running a motor vehicle.For those households where a car is not used, transport costs are modest. However, for manyhouseholds in the study keeping a car was very important in maintaining mobility andindependence. Shopping, social activities and general involvement in community activities arenot possible without access to a car. For these households vehicle expenses often approached$3,000 per annum, between 20% and 30% of total household expenditures.

Health costs were significant for many households, at 10% or more of total expenditures. Thiscompares to weightings of between 3% and 7% in the indicative budget studies and the HES.Many in the sample had health problems, as does the aged population more generally, andplaced a high priority on maintaining private health insurance. Gap payments, and dental andchemist bills, also are substantial for many aged households. Private health insurance costcouples more than $1,300 a year. Gap payments and dental costs typically amounted tohundreds of dollars more.

Lifestyle and recreation costs are also significant for many of the households in the sample,and in way that differ from the HES generally and the indicative budget standards. Therecreation activities are not a neat mix of film, theatre, books, magazines and outings. Costs ofregular trips to licensed clubs in the pursuit of $3 or $5 meals and the chance to win a meat orfruit tray form a large part of leisure costs featured in our sample. Expenditure on alcohol forsome households is not insignificant, but many in the sample were not able to afford being in a“shout” at the club – with the implication of social isolation. $3,000 or $4,000 per annum inexpenditure was not uncommon in the sample for leisure costs, but a large part of this in factrelates to the purchase of relatively cheap meals at licensed clubs and the like. Holidayexpenses usually were very modest, or involved the running down of savings to undertake amore substantial holiday from home. A number in the sample never took or had becomeunable to afford an overseas holiday.

Donations and gifts also were larger as a percentage of expenditure than the population moregenerally. Gifts and donations generally amounted to between $500 and $1,000 per annum andsometimes more. This is 5% or more of total expenditure for many of the households sampled,which is substantially more than the 2% or 3% for population as a whole. Church and familyare amongst the recipients.

Where expenditure is low compared to the population as a whole and non-aged low incomegroups are items such as clothing and footwear, personal care, household goods and services,including domestic appliances, and food.

The Table below sets out the various expenditure patterns for both the SPRC Low Cost (LC)and Modest But Adequate (MBA) budget standards, patterns of expenditure for the lowest 20%of the income distribution in the ABS Household Expenditure Survey, and the broad patternsdisclosed by this study.


Table 1: Expenditure patterns for a single aged person (per cent of totalexpenditure)Budget area SPRC – Low

Cost BudgetSPRC –Modest ButAdequate

ABSHouseholdExpenditureSurvey

ASFA/AgeingAgendasSample

Housing 21 17 15 >20Energy 4 3 5 3Food 17 17 25 15Clothing andFootwear

6 5 6 2

Householdgoods

17 16 19 5

Health 3 3 7 15Transport 18 20 11 >20Leisure 10 14 9 >20Personal care 3 6 4 1

Total 100 100 100 100

Appendix B provides further detail of the expenditure profiles of those interviewed in theASFA/Ageing Agendas survey.

Could you Budget on this?The purpose of examining and outlining these expenditures is to describe the reality andlifestyle at certain levels of income.

In the ASFA profiles 7 respondents live alone, and owned their own home. Their incomesranged from $8,930 - $30,593. The majority (4 respondents) had incomes within the range of$19,150pa - $21,167pa.

Their expenditure patterns are detailed in Appendix B.

The following table draws from the ABS household expenditure survey as to the differingexpenditure patterns of different levels of household income. The table profiles the type oflifestyle that mirrors such income and expenditure patterns. Such an analysis is clearlyrelevant in setting individual and community targets of adequacy.

It is perhaps relevant to note that 9% SG (for someone on AWE after 30 years employment)would provide a retirement income of approximately $19,000pa (with part pension).Increasing SG to 12% would result in improved situation and income of about $22,000pa, and15% SG would result in improved situation and income of approximately $24,400. But eventhese amounts remain lower than the required / anticipated budgets and lifestyles of many ofthose in this sample and for this generation of retirees.


Table 2: Illustrative expenditure patterns at different retirement incomelevels(a)

Budget area Age Pension -$10,000 perannum

Age PensionplusSuperannuationGuarantee for30 years at 9%of AWE

Age Pensionplus SG at 12%of AWE.

Age Pensionplus SG at 15%of AWE.

Housing $2,300If renting, onlygov’t rentalwith rentassistance.Home ownerscover basiccosts, noallowance formaintenance.

$4,400Can affordstrata levies butcan onlyundertake somebasicmaintenance

$4,500Can affordstrata levies formore expensiveunit or somemoremaintenance

$4,600

Energy $300Limited use ofenergy, one barradiator.

$500Can use twobar radiator,take baths,higher wattagelightbulbs.

$700Able to useclothes dryer.

$1,200Able to usecentralheating/airconditioner forlimited periods.

Food $1,500$29 per weekVery basic diet,limited meatand fruit, nofrills.

$3,000$58 per weekGreater rangeof meat andfruits. Able tofeed dog or cat.

$3,500$67 per weekMore seafoodand more fruits.

$4,000$77 per weekGood qualitycuts of meat,seafood anddeli items.

Clothing andFootwear

$200Can onlyreplace basicclothing.

$500Purchase of anew outfit eachyear, shoerepairs.

$800Two newoutfits from achain store.

$1,000Two newoutfits and newshoes.

Householdgoods

$500Emergencyrepairs andreplacementonly.

$1,000Able to updateone majorappliance ayear.

$1,200Somepurchases ofminorappliances.

$1,400Regularupdating ofsmall and somemajorappliances.


Health $800Cannot affordhealthinsurance, notall scriptsfilled, dentalwork not done.

$1,700Basic healthinsurance.All scriptsfilled, and basicdental.

$2,000Extras healthinsurance,possibility ofspecialistdental or gappayments.

$2,200Extras healthinsurance, canhave specialistdental, fashionframes forspectacles.

Transport $1,900Struggling tomaintain car.

$2,500More able tomaintain car.

$3,000Able to covermorekilometres.

$3,500Able to travelinterstate, keepvehicle in goodorder.

Leisure $2000$3 meals atlocal club, noalcohol, someraffle tickets.No holidays.

$4,000Able to attendclubs moreregularly, somemeals outelsewhere.Possibly able tohave holiday inown state inlow costdestination.

$4,500Eat out moreregularly, somecinemaattending andmagazinepurchase.More up-market holidayaccommodation.

$5,500Able to eat outin restaurants,able to buysome booksand attendcultural events.Occasionalinterstateholiday.

Personal care $100A few haircuts,limited makeupand groomingaids.

$400Able to havehair coloured(female) ormore regulartrips tohairdresser.

$600 $1,000Regular trips tohairdresser,podiatrist etc.Some makeupand perfumepurchases.

Gifts anddonations

$400Only coins forcollection atchurch, smallgifts for familymembers

$1,000Able to makeregulardonations,modestpresents forrelatives

$1,200Able to givemore presentsand donations

$2,000

Total incomeandexpenditure

$10,000 $19,000 $22,000 $24,400

(a) Expressed in today’s dollars. Assumes retiree was on average weekly earnings (currently$40,000) when employed, and made superannuation contributions (at levels indicated) for 30years. Assumes that superannuation benefit is taken in the form of an indexed life annuity.


Lifestyle ‘markers’Developments in demography, labour force outcomes, living standards and expectations willmake the provision of adequate retirement incomes even more challenging in the future.

As indicated by Table 3, both males and females are living longer. This is to be welcomed, butit does increase the period in retirement that has to be financed. Private savings will have to bespread over an increasing number of years. Babyboomers retiring in 2020 will need to fund anadditional 3 or 4 years in retirement compared to individuals who retired at similar ages inrecent years.

Marked changes in the characteristics of the labour force can also be expected to continue.While females can be expected to continue to increase their participation rate in the paid labourforce and the total number of years they are in the labour force, both participation rate andyears in the labour force for men can be expected to continue to decrease.

Convergence to around 30 years in the labour force can be expected for both men and women.This highlights the need for private savings programs based on 30 years of contributions ratherthan the 40 years assumed in most government calculations.

Future retirees will have been better educated than earlier cohorts or retirees, or at least havehad higher participation rates in higher education. They will have experienced higher livingstandards during their working years compared to earlier age cohorts in terms of wages andreal income, and will expect higher standards of living in retirement than their parents orgrandparents. What were luxuries as recently as the 1970s have already become common, andwill be perceived as necessities when the babyboomer demographic bulge hits retirement.

Table 3: Markers of needs, economic capacity, and expectations ofliving standards

1970s 1990s 2000 2020Living longerLife Expectancy at birth – males 68.2 74.5 75.6 82Life Expectancy at birth – females 75 80.4 81.3 86.5Life Expectancy at age 65 – males 16.1 17 20Life Expectancy at age 65 – females 19.8 20 23

Working for less yearsExpected years in employment – males 42 38 36 35Expected years in employment - females 20 27 28 30Participation rate for persons aged over 55 years 30 25 24 22Participation rate for males 82.5 73.9 72.8Participation rate for females 40.6 51.7 53.9Percentage of workforce aged persons receivingsocial security payments

4.5 12.5 18.6 20

Higher education participation rate 6 13.7 18 20Unemployment rate 2.5 10.4 6.8

Higher incomesAverage weekly earnings – males $106 $636 $769.6 $1143.60Average weekly earnings – females $69 $501 $514.1 $763.93Real disposable income (index value) 100 143 185 274


Higher expectationsMotor vehicles per 1000 persons 403 558 644 700Percentage of owner occupied housing 66 67 70 70Telephone connections per person 0.23 0.52Mobile phones per person 0.26 0.67% of households with – colour TV 49 99 99 99video recorder 0.1 80 87 99 Microwave 0 62 83 95 Computer 47 90 Internet 22 80


Appendix A – The Survey§ Age � 55-59 Sex � Male

� 60-64 � Female� 65-69� 70 – 75� 76 and over

§ I live: � alone � with spouse or others§ I rent � or own � my home

§ My retirement was: � planned � unplanned

§ I still get work (occasionally) � yes � no

§ Years since “retirement”? _____ years

§ My principal occupation for the last 10 years before my retirement was……………

§ What was your principle income at retirement?

� age pension: was this – part � full �� superannuation� other investments� other

§ What is your principle income now?

� age pension: is this – part � full �� superannuation� other investments� other

Which description comes the closest to describing you?

� I am active in hobbies, sports, volunteer work or other interests� I get out a few times a week� Health problems limit my activities

My name and contact details are:

Name: ________________________________________________________________Address: ______________________________________________________________Tel: _____________________________


Demographics

If a spouse is involved ensure that form is completed for spouse as well. Details relating todeceased spouse should be gathered for pre-retirement, financial situation at retirement andhealth costs.

Most of the following should have been recorded on the survey form EXCEPT for thoseitems in italics

GenderAgeLocationLiving arrangements: Alone / with partner / family / friends/ retirement village/hostelSingle / couple / separated/ widowed – how long?Rent/ Own home/ Mortgage – how long have you owned it?Retired how long agoRetirement planned /unplannedPrevious occupation

Pre-retirementSelf Spouse

For how many years did you work?Were there any periods when you were notworking or working part-time?What was the approximate yearly taxableincome for last 10 years of working life?(wages/ salary/investments/etc)

Financial situation at retirementAny Government Aged/Service Pension on retirement: How much? or full/part

Did you have any superannuation when you retired? How much?

How was it taken: lump sum? How was it spent? Holiday, home, income stream, other?

If income stream, how much per month/period?

What level of financial assets (savings, shares, investments) did you have when you retired?

Any income from other investments: Shares $ Property $ Other investments

Total fortnightly /annual income just following your retirement


Income nowWhat is your current fortnightly/weekly/annual income?

How much of your income comes from Age/Veterans pension?Superannuation?Investments? Shares/ Property

Do you have a weekly, fortnightly or monthly budget? Y/N

How much do you generally give yourself a week to live on? (Does this include an allowancefor fixed expenses such as council rates?)

What does that cover?

Are there any expenses that you have to save for? What are they? How often do they comearound?

Are you able to live off your regular income or do you need to draw on your capital or savingsto make ends meet? (Don’t confuse with the amount they give themselves to live on)

How much do you currently have in savings (include shares and other investments)?

Lifestyle in RetirementHow would you describe your lifestyle at present?

Do you belong to any clubs or social groups or do you do any other activities regularly? (Probeto find out the range of activities – volunteering, church, hobbies, sport, etc )

What sort of costs are associated with each of these activities?

Do you go to:Movies Y/N How often?Theatre Y/N How often?Restaurants Y/N How often?

Has there been any change in how frequently you do these things or in the types of things youdo since retirement?

What things would you like to do but find you cannot afford to do now?

Do you have family members living locally? Y/NHow often do you see members of your family?

Do you have any costs associated with visiting your family?

How does this affect how often you see them? (do you have to save up, go without?)


Do you smoke? What costs areinvolved?

Would you smokemore if you had moreincome?

Y/N

Do you drinkalcohol?

What costs areinvolved?

Would you spendmore on alcohol if youhad more income?

Y/N

Do you buy lotterytickets, power ball,poker machines,etc?


Would you buy morelottery tickets etc ifyou had more income?

Y/N

How frequentlywould you buybooks andmagazines?


Would you buy morebooks and magazinesetc if you had moreincome?

Y/N

Has there been any change in how frequently you do these things or in the types of things youdo since retirement?Ensure that section 6 of the expenditure sheet is complete – except holiday entry.

To what extent are you able to afford to do the things you want to do?

Is there anything that you thought you would be able to do that you have found that you can’t?

Do you pay someone to do anything for you eg cut the grass, clean, paint etc Y/N How muchdoes it cost? include on expenditure sheet. Do you think that you will have to spend more onthis as you get older? Y/NHow will you afford this?

How would you describe your health?

Could you quickly tell me whether you have any health conditions/disabilities which limit youractivities in a way that results in extra costs?

Do you have any health conditions which require you to see a medical practitioner from time totime?


Regular BillsI am interested in the amount it costs you to live in retirement. Could we look at the sheet wesent you to list your expenditure. If we start with the regular bills we all face.

Refer to Section 1 List of Expenditures. Ensure that this sectionof the expenditure list is completedHow much do you pay for these regularly occurring bills?Rent/Mortgage repayments?Energy (gas & electricity)Contents insuranceHouse insurance (if applicable)Water rates (if applicable)Council rates (if applicable)TelephoneCredit card

How do you cope with the regular bills – by saving up for them or by dealing with them fromyour savings/investments as they come along?

Is there any particular time of year when you find it more financially difficult to cope with yourbills? When is that? What is the cause?

Have you encountered any significant unanticipated costs during retirement? How did it/theyaffect you?

TransportDo you have a car? Y/N

If Yes, how old is it?

Approximately how much does it cost you to run per year?Rego, Green slip, 3rd party property/ comprehensive insurance, petrol each week, services andrepairs, tyres etc? Ensure expenditure section 2 is complete

What do you use your car for? Do you use the car whenever you want or do you limit its use attimes?

Do you find it a difficult to afford to run the car? Y/N

Does anyone help you with the cost of the car? Y/NIf no car, did you have one before retirement? Y/N

Did you stop running a car because of the cost? Y/N

How far into your retirement did you give up running the car?

Are there any circumstances where you wish you still had a car?


What is your main method of transport now? Explore bus, train ferry, relatives’/ friends’ car

Do you make use of the concession on public transport? Y/N How valuable is that to you?

How do you find getting the groceries in?

How do you go about visiting family/friends?

Do you ever catch a taxi? How often?

How much does it cost you for transport each week? (Ensure expenditure sheet S 2 completed)

How much more money would you need to make life easier through the greater use of car/taxi,etc

FoodHow much does it cost you for food? Probe to see if the person does all their shopping at asupermarket or at a range of outlets. Ensure that food section on expenditure sheet iscompleted

How does this expenditure compare with your before retirement spending on food?

Have you cut out some items because of the cost Eg do you buy less meat or seafood oranything you used to buy?

Has your retirement income influenced what you shop for in any way? Y/NHow?

Has your retirement income influenced how you shop? (e.g., pensioner discount days atsupermarkets, buy some items in bulk, shop around more to get a good price)

How much extra, if anything would be needed for you to be able to eat what you think youneed?

Health costsEnsure that the health history of both members of the couple is recorded.Refer back to health question in retirement lifestyle

You described your health earlier as Good/ moderate/ poorHave you encountered any significant health costs during retirement?(NB probe for costs incurred by deceased partner)

You mentioned you had XXXX health problems.How frequently do you see a GP?; specialist?; physio or other health related practitioner?


Does your GP bulk bill? Y/N (Complete expenditure sheet on GP)If no: Does this ever have any impact on your decision to go to the doctor when youare ill?

Does the specialist bulk bill? Y/N (Complete expenditure sheet on specialist)

Do your health problems result in any medical costs?

Do you have private health insurance? Y/NDo you have ancillary cover? What do you pay for your health insurance?How do you pay (yearly, 6 months, quarterly, monthly)? Why do you pay it that way?

If no, if you had another $5,000 a year in income would you have health insurance orwould you spend it on something else?

When your doctor prescribes some medicine or tablets or cream, do you always get theprescription filled? Y/N

If no: Why is that?

If Yes: Does the purchase of the prescriptions limit what you spend on other things?

What other things?

Do you have a card or does your chemist have a card to keep track of your expenditureon prescription medicines over the courses of the year? (PBS) Y/N

Do you sometimes find that you reach the threshold where you don’t have to pay forprescription medicines for the rest of the year? Y/N

If have health insurance Is the gap between the cost of medical or hospital service andthe benefit you receive a concern for you? Does this have an impact on what you mightand might not have treated?

How frequently do you see a dentist? Do you attend a local dentist or do you attend a freedental clinic?

Have there been any occasions where you would have seen a dental specialist but you couldnot afford to?

Would you ever consider having a tooth extracted rather than it being saved through expensivetreatment?

Do any community services assist you eg home care, Home Maintenance & modification. Y/NHow much does it cost? include on expenditure sheet

Do you find these costs a strain? Y/N

Do you have any expenses arising from your health that you did not plan or expect before youretired?Ensure expenditure section 4 is completed.


Purchasing new household itemsHave you bought any new items of furniture, new electrical appliances or white goods in thelast year? Y/N

If Yes: What did you purchase?Ensure expenditure section 5 is completed.

Are there items in the house you feel need replacing but you cannot afford to replace? Y/NIf Yes: What are they?

Would a $250 cost of repair of your washing machine or fridge cause you any financialdifficulties?

What about if the washing machine needed to be replaced? Would that mean cutting back insome other areas of expenditure?

HolidaysHave you taken a holiday in the last 2 years? Y/NIf Yes, was the holiday

♦ Local♦ Away from the local location but in the state♦ In another state♦ Overseas

Did you♦ Stay with relatives♦ Stay in a caravan♦ Stay in a motel/hotel♦ other

What was the overall cost of the holiday? Include on expenditure sheet

If NO: When did you last take a holiday?

Are you planning another holiday at any time? If yes: How will you pay for this holiday? Willthis impact on your weekly/fortnightly spending or will it come out of your savings?

Do you feel you are limited in your ability to take / the type of holidays♦ you used to take♦ expected you would be able to take♦ would like to take in retirement

Ensure expenditure section 6 is completed.

Other ExpensesHow much would you spend each year on clothing and shoes? Hairdressers?

What about birthday presents, gifts or donations?

Do you have a pet that you spend money on?


Total ExpenditureIt would appear from your list of expenditures that your total annual spending is XX. If theexpenditure exceeds the income probe for accuracy and check for overlooked income.

Note whether people appear to be living within their income, saving or running down capitaland confirm this with interviewee.

If pensioner: What do you estimate that the concession card saves you?(Rego, license, Council and water rates, telephone, public transport, health)

Expectations of retirementDid you think much about retirement before you retired? Y/NHow did you see it?

In the five years before you retired what did you expect of retirement?

Did you have an idea about how much you might need to live on in retirement? Y/NIf so, what was it? How accurate was that estimate?

Did you save for retirement? Y/N What preparations did you make? Eg plan to sell familyhome to trade down, sell shares, property, etc

If superannuation: How long were you a member of a superannuation fund? Did your employermake contributions on your behalf? Y/NDid you make contributions on your own behalf? Y/N

If Yes: How long did you make contributions for?

What was the value of your own contributions?

Have you had any significant expenses in retirement which you did not anticipate?

How has your experience matched with your expectations?

Is there anything that you thought you would be able to do in retirement that you have foundthat you can’t?

What would you say have been the best features of retirement?

What would you say have been the worst features of retirement?

What advice would you give to younger people about preparing for retirement?


Appendix B

CASE STUDIES AND EXPENDITUREPROFILES


LIST OF EXPENDITURES – Miss NItems of Expenditure Weekly Quarterly Yearly

1 Rent $3,503.00Council ratesWater ratesElectricityGasBuilding InsuranceContents Insurance $193.50Telephone $800.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink SlipCompulsory 3rd party insurance (greenslip), $383.00Comprehensive insurance, $383.003rd party property insuranceService and repairs, tyres $2,011.00Petrol $240.00Drivers LicencePublic transport $150.00Taxis

3 Food $4160.00Fruit & Veg - SupermarketButcherCorner storeFood Services eg Meals on Wheels nil

4 HealthDoctor – Gap between M/Care/Health fund $905.00ChemistDentist $205.00Health Insurance $877.00Community support services nil

5 Household items replacement/repairsHome maintenance-repairs-renovation-lawnmowing/gardening

6 Lifestyle costsEntertainment/ clubs/restaurants/ sport/ recreation/hobbies $200.00Books/magazines/ subscriptions $400.00Alcohol and cigarettes $180.00Holidays $530.00Lottery tickets, powerball, gambling, etc

7 OTHERClothing & footwear $650.00Gifts, donations $120.00Pet expenses nilHairdressingDrycleaning $60.00Laundromat $180.00TOTAL $16,130.5

Miss NØ Female 76 and overØ Lives aloneØ Rents – retirement villageØ Retirement unplannedØ 12 years since retirementØ Age pension and some investmentsØ Health problemsØ Her income last year was $14,000 from a full pension, rent assistance and $5,000 investment income. She has

about $60,000 invested.


LIST OF EXPENDITURES – Miss PItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units) 1120.00Council rates 600.00Water rates 76.00Electricity 255.00Gas 208.86Building InsuranceContents Insurance 169.00Telephone 247.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink SlipCompulsory 3rd party insurance (greenslip),Comprehensive insurance,3rd party property insuranceService and repairs, tyresPetrolDrivers LicencePublic transport 364.00Taxis

3 FoodFruit & Veg - Supermarket 1240.00Butcher 260.00Corner storeFood Services eg Meals on Wheels

4 Health - glasses 212.00Doctor 15.00Chemist 100.00Dentist 210.00Health InsuranceCommunity support services

5 Household items replacement/repairsHome maintenance-repairs 560.00-renovation-lawnmowing/gardening

6 Lifestyle costsEntertainment/ clubs/restaurants/ sport/ recreation/hobbies 2104.00Books/magazines/ subscriptions 214.20Alcohol and cigarettesHolidays 275.00Lottery tickets, powerball, gambling, etc 200.00

7 OTHERClothing & footwear 200.00Gifts, donations 150.00Pet expensesHairdressing 150.00

TOTAL 8,930.06

Miss P

Ø Lives aloneØ Owns own unitØ Retired 14 yearsØ Retirement plannedØ Retirement Income $11,000 from Full Age Pension plus $1000/yearØ Has $50,000 in savings


LIST OF EXPENDITURES – Mr & Mrs MItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units)Council rates 730.97Water rates 261.60Electricity 932.00GasBuilding Insurance 244.16Contents Insurance 308.82Telephone 200.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink SlipCompulsory 3rd party insurance (greenslip), 317.00Comprehensive insurance, 391.833rd party property insuranceService and repairs, tyres 1000.00Petrol 1300Drivers Licence 00Public transport 80.00Taxis

3 FoodFruit & Veg - Supermarket 5200.00Butcher 1300.00Corner store 520.00Food Services eg Meals on Wheels

4 HealthDoctor 75.00Chemist 150.00Dentist 1000.00Health Insurance 600.00Community support services

5 Household items replacement/repairs 2080Home maintenance-repairs-renovation-lawnmowing/gardening

6 Lifestyle costs 1500.00Entertainment/ clubs/restaurants/ sport/ recreation/hobbies 4680.00Books/magazines/ subscriptions 108.00Alcohol and cigarettes 2080.00Holidays – paid for from savings (5000.00)Lottery tickets, powerball, gambling, etc

7 OTHERClothing & footwear 596.00Gifts, donations 1,000.00Pet expenses 800.00Hairdressing

TOTAL 27,455.38

Mr and Mrs MØ Married coupleØ Own homeØ Retirement unplannedØ 8 years since retirementØ Retirement income – Age pension, income from part time employment (Mrs) and borderØ Current income is $21,000 pa from his part-pension, her business income and a small amount of interest.

(This figure may be an underestimate as some expenses are covered through Mrs. M’s business) and $6,000from a boarder.

NB Holiday and expenditure in house maintenance from savings.


LIST OF EXPENDITURES – Mr CItems of Expenditure Weekly Quarterly Yearly

1 Mortgage repayments/Maintenance (units) 13,800.00Council rates 543.50Water rates 300.00Electricity 504.00Gas 180.00Building Insurance 1436.00Contents InsuranceTelephone 516.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink SlipCompulsory 3rd party insurance (greenslip),Comprehensive insurance,3rd party property insuranceService and repairs, tyresPetrolDrivers LicencePublic transport 364.00Taxis 260.00

3 Food 1560.00Fruit & Veg - SupermarketButcherCorner storeFood Services eg Meals on Wheels -

4 HealthDoctorChemistDentist – Likely to be ‘one off’ costs 1750.00Health Insurance 864.00Community support services

5 Household items – from savings (2,300)Home maintenance-repairs-renovation-lawnmowing/gardening

6 Lifestyle costsEntertainment/ clubs/restaurants/ sport/ recreation/hobbiesClub memberships $102 Movies $40/Qter

4160.00 102.00160.00

Books/magazines/ subscriptions 49.50Alcohol and cigarettes 2656.00HolidaysLottery tickets, powerball, gambling, etc 520.00

7 OTHERClothing & footwear 400.00Gifts, donations 360.00Pet expensesHairdressing 108.00TOTAL 30,593.00

Mr CØ Single MaleØ Owns homeØ Retirement plannedØ 11 years since retirementØ Retirement income - InvestmentsØ Health problemsØ Total income $27,350.00 from property investments and term deposits.


LIST OF EXPENDITURES – Mr EItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units) 1120.00Council rates 256.00Water rates 76.00Electricity 278.00GasAll Insurances – building, contents, car 1097.00Contents InsuranceTelephone 1225.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink SlipCompulsory 3rd party insurance (greenslip),Comprehensive insurance,3rd party property insuranceService and repairs, tyresPetrol – all car costs 5200.00Drivers Licence 25.00Public transport 300.00Taxis

3 Food 2600.00Fruit & Veg - SupermarketButcherCorner storeFood Services eg Meals on Wheels

4 HealthDoctorChemist 200.00DentistHealth Insurance 1344.00Community support services

5 Household items replacement/repairsHome maintenance-repairs-renovation-lawnmowing/gardening

6 Lifestyle costsEntertainment/ clubs/restaurants/ sport/ recreation 2040.00Books/magazines/ subscriptions 55.00Alcohol and cigarettes 1560.00Holidays 1500.00Lottery tickets, powerball, gambling, etc

7 OTHERClothing & footwear 150.00Gifts, donations 200.00Pet expensesHairdressing 80.00Mobile phone 180.00TOTAL 19,486.00

Mr EØ Single maleØ Lives aloneØ Owns UnitØ Retired 10 yearsØ Retirement unplannedØ Retirement income – $20,000 superannuation pension – no savingsØ At the time of the interview, he had just been granted a Veterans pension – expenditure sheet and case study

relate to period before grant of pension. He had been arguing with DVA for a few years.Ø Health problems


LIST OF EXPENDITURES – Mr XItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units)Council rates 841.00Water rates 464.00Electricity 400.00Gas 920.00Building Insurance 258.00Contents Insurance 209.00Telephone 479.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink Slip 217.00Compulsory 3rd party insurance (greenslip), 404.00Comprehensive insurance, 432.003rd party property insuranceService and repairs, tyres 400.00Petrol 900.00Drivers Licence 23.00Public transport 20.00Taxis

3 Food 4680.00Fruit & Veg - SupermarketButcherCorner storeFood Services eg Meals on Wheels -

4 HealthDoctor 800.00Chemist 880.00Dentist 300.00Health Insurance -Community support services

5 Household items replacement/repairs 200.00Home maintenance-repairs 500.00-renovation-lawnmowing/gardening 750.00

6 Lifestyle costsEntertainment/ clubs/restaurants/ sport/ recreation/hobbies 3,200.00Books/magazines/ subscriptions 550.00Alcohol and cigarettes 1040.00HolidaysLottery tickets, powerball, gambling, etc

7 OTHERClothing & footwear 900.00Gifts, donations 800.00Pet expensesHairdressing 120.00House cleaning 480.00TOTAL 21,167.00

Mr X

Ø WidowedØ Lives aloneØ Owns homeØ Retired 5 yearsØ Retirement income – $27,000 from investments and rentØ Health problems


LIST OF EXPENDITURES - Mr & Mrs BItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units) 1160.00Council rates 300.00Water rates 80.00Electricity 520.00GasBuilding Insurance Included in strata maintenanceContents Insurance 150.00Telephone 400.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink SlipCompulsory 3rd party insurance (greenslip), 330.00Comprehensive insurance, 620.003rd party property insuranceService and repairs, tyres 500.00Petrol 500.00Drivers LicencePublic transport 200.00Taxis

3 FoodFruit & Veg - Supermarket 3000.00Butcher 750.00Corner store 250.00Food Services eg Meals on Wheels

4 Health – Chiropractor 500.00Doctor 200.00Chemist 400.00Dentist – this year only 3000.00Health Insurance 900.00Community support services

5 Household items replacement/repairs 1000.00Home maintenance-repairs-renovation-lawnmowing/gardening

6 Lifestyle costsEntertainment/ clubs/restaurants/ sport/ recreation/hobbies 1250Books/magazines/ subscriptions 650.00Alcohol and cigarettes 2000.00HolidaysLottery tickets, powerball, gambling, etc

7 OTHERClothing & footwear 500.00Gifts, donations 500.00Pet expensesHairdressing

TOTAL 19,660.00

Mr and Mrs B

Ø Married CoupleØ Own homeØ 7 years since retirementØ Retirement income – age pension and other investmentsØ Health problemsØ Total income – about $22,000 pa


LIST OF EXPENDITURES – Mr & Mrs BNItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units) 298.00Council rates 77.00Water rates 600.00ElectricityGasBuilding Insurance Body corporate fees$374,23 / Qter & oneoff levy of $1600

3097.00

Contents Insurance 211.00Telephone 400.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink Slip NRMA membership 50.00Compulsory 3rd party insurance (greenslip), 232.00Comprehensive insurance,3rd party property insuranceService and repairs, tyres 200.00Petrol 1040Drivers LicencePublic transport 260.00Taxis 260.00

3 Food 3120.00Fruit & Veg - SupermarketButcherCorner storeFood Services eg Meals on Wheels 2184.00

4 Health Hospital gap 150.00Doctor 530.00Chemist 350.00DentistHealth Insurance 1200.00Community support services 234.00

5 Household items replacement/repairs 100.00Home maintenance-repairs 300.00-renovation 600.00-lawnmowing/gardening

6 Lifestyle costs 150.00Entertainment/ clubs/restaurants/ sport/ recreation/hobbies 65.00Books/magazines/ subscriptions 302.00Alcohol and cigarettesHolidays - N.Y. Not included in total (7000.00)Lottery tickets, powerball, gambling, etc

7 OTHER 90.00Clothing & footwear 200.00Gifts, donations 500.00Pet expenses 150.00Hairdressing 150.00Traffic fine 204.00TOTAL 17,304.00

Mr and Mrs BN

Ø Couple 76 and overØ Own homeØ Retirement unplannedØ 12 years since retirementØ Age pension, part UK pension, carers paymentØ Health problemsØ Total income $20,850 from a full pension, part English pension and a carers allowance.


LIST OF EXPENDITURES – Mr & Mrs GItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units) 4600.00Council ratesWater ratesElectricity 800.00GasBuilding InsuranceContents Insurance 147.00Telephone 400.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink SlipCompulsory 3rd party insurance (greenslip), 323.00Comprehensive insurance, 299.003rd party property insuranceService and repairs, tyres 700.00Petrol 1560.00Drivers LicencePublic transport 48.00Taxis

3 FoodFruit & Veg - Supermarket 4160.00Butcher 1040.00Corner storeFood Services eg Meals on Wheels

4 HealthDoctor 40.00Chemist 160.00DentistHealth InsuranceCommunity support services

5 Household items replacement (3210.00)Home maintenance-repairs-renovation-lawnmowing/gardening

6 Lifestyle costsEntertainment/ clubs/restaurants/ sport/ recreation/hobbies 2080.00Books/magazines/ subscriptions 61.50Alcohol and cigarettes 260.00Holidays 1000.00Lottery tickets, powerball, gambling, etc


TOTAL 19,003.50

Mr and Mrs G

Ø Department of Housing accommodation – rentØ Retired ten yearsØ Retirement unplannedØ Retirement income of approximately $22,500 from an age pension, a small amount of English pension and a

carers allowance.Ø Health problems


LIST OF EXPENDITURES – Mrs ZItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units)Council rates 711.00Water rates 160.00Electricity 300.00Gas 150.00Building Insurance 296.00Contents InsuranceTelephone 620.00Credit card billsLoan repayments

2 Car and transportCar Registration/Pink SlipCompulsory 3rd party insurance (greenslip),Comprehensive insurance,3rd party property insuranceService and repairs, tyresPetrolDrivers LicencePublic transport 60.00Taxis 40.00

3 Food 2700.00Fruit & Veg - SupermarketButcherCorner storeFood Services eg Meals on Wheels Home Delivery 40.00

4 HealthDoctorChemist 600.00Dentist 220.00Health Insurance 339.60Community support services

5 Household items replacement/repairs 700,00Home maintenance-repairs 255.00-renovation 650.00-lawnmowing/gardening 630.00

6 Lifestyle costsEntertainment/ recreation/hobbies 440,00Books/magazines/ subscriptions 100.00Alcohol and cigarettesHolidaysLottery tickets, powerball, gambling, etc

7 OTHERClothing & footwear 115.00Gifts, donations 700.00Pet expenses 690.00Hairdressing 120.00Postage 280.00TOTAL 10,916.60

Mrs Z

Ø Single - widowedØ Owns homeØ Retirement plannedØ 25 years since retirementØ Retirement income – Full pension and small investment income.Ø Total income $11046.00 from full pension and term deposit.


LIST OF EXPENDITURES – Mrs RItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units)Council rates 1129.32Water rates 452.00Electricity 400.00GasBuilding Insurance 212.15Contents Insurance 138.00Telephone 520.00Credit card bills 500.00Loan repayments

2 Car and transportCar Registration/Pink Slip 220.00Compulsory 3rd party insurance (greenslip), 331.00Comprehensive insurance, 446.663rd party property insuranceService and repairs, tyres 1002.00Petrol 650.00Drivers Licence 23.00Public transport 48.00Taxis

3 Food 2,600.00Fruit & Veg - SupermarketButcherCorner storeFood Services eg Meals on Wheels

4 HealthDoctor 30.00Chemist 40.00Dentist 160.00Health Insurance 668.72Community support services

5 Household items replacement/repairs 800.00Home maintenance-repairs 240.00-renovation 2,347.00-lawnmowing/gardening 300.00

6 Lifestyle costsEntertainment/ clubs/restaurants/ sport/ recreation/hobbies 1760.00Books/magazines/ subscriptionsAlcohol and cigarettes 520.00Holidays 3,250.00Lottery tickets, powerball, gambling, etc


TOTAL 20,877.85

Ms R

Ø Female 65-69Ø Lives aloneØ Owns homeØ Retirement plannedØ 13 years since retirementØ Income $15,000 - InvestmentsØ $5,000 from employmentØ Health problems


LIST OF EXPENDITURES – Mrs. SItems of Expenditure Weekly Quarterly Yearly

1 Rent/Mortgage repayments/Maintenance (units) 1,000.00Council rates 248.30Water rates 77.20Electricity 404.00GasBuilding InsuranceContents Insurance 166.88Telephone 960.00Credit card bills 4,800.00Loan repayments ( car) 2,000.00

2 Car and transportCar Registration/Pink Slip 23.00Compulsory 3rd party insurance (greenslip), 325.00Comprehensive insurance, 615.003rd party property insuranceService and repairs, tyres 330.00Petrol 780.00Drivers LicencePublic transport 100.00Taxis

3 Food 3,200Fruit & Veg - SupermarketButcherCorner storeFood Services eg Meals on Wheels

4 HealthDoctorChemist 360.00DentistHealth Insurance 500.00Community support services

5 Household items replacement/repairs 244.00Home maintenance-repairs 71.00-renovation-lawnmowing/gardening

6 Lifestyle costsEntertainment/ clubs/restaurants/ sport/ recreation/hobbies 75.80Books/magazines/ subscriptions 42.00Alcohol and cigarettes 416.00Holidays 900.00Lottery tickets, powerball, gambling, etc

7 OTHERClothing & footwearGifts, donations 1400.00Pet expensesHairdressing 112.00TOTAL 19150.18

Mrs S

Ø WidowedØ Lives aloneØ Own unitØ 10 years since retirementØ Retirement income – $13,800 from full age pension and boarder, plus $1000 from son each year.Ø Maintains a significant credit card bill

Documents

Looking forward to retirementis this as good as it gets? · ACOTA / ASFA / Ageing Agendas 2000 4 outdated motor car, which is important for mobility. People entering retirement do