Covid Income

Money
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By far the biggest issue I have had in the past 18 months is lack of income.
A self funded retiree, I finalised my retirement plans 10 years prior to retiring in 2008.
The transition from work to retirement was easy. I simply stopped work and lived off my investments, still trading on a Tax File Number, not an ABN.
I have been living a comfortable life.
In March 2020 my income stopped, thanks to Covid.
As a 71 year old, I was ordered by the State Government to stay home, because I was vulnerable. .
So! I found myself in the situation where I had no income and no ability to go into the community to sell anything.
But the business bills, Council rates, Water rates and State Government fees didn’t stop.
I got no significantly useful direct help from the Government.
While reserve bank interest rates fell to emergency low levels, any money I could access retained stubbornly high interest rates. The Visa card at 19% and the Pensioner Loan is 4.5%.
Because I’m self funded, I do not qualify for a pensioner loan, so the time applying for that was wasted.
Fortunately I have been able to organise private funding, but to repay this I will have to sell my (potentially) income producing major asset if, or when, the market improves.
Ironically, by not paying me either the pension, or unemployment benefit, the Government is most likely relegating me to a pensioner for the remainder of my life.

Visa rates could have been forced down by emergency decree.
The Government could have made low interest rate loans available.

I am most disappointed the Governments could not comprehend that if incomes were stopped, if costs weren’t also stopped then income assistance needed to be given.

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It sounds like you put your savings into property which stopped returning money when tenants stopped paying due to COVID. This is most unfortunate and I agree that the government subsidies to get us through the plague have been somewhat hit and miss, not so good if you are in an area that missed.

At a broader level however there is good information here for those who are making retirement plans. Do not put all your savings into one income source, diversify your investments so that in the event of a problem in one sector you have not lost all.

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Excellent advice, too late for some. As a self funded retiree I have a dividend stream, what is now a fairly minor interest income, defined income streams, and super accounts. I party when they all go up, but even if they all go down I have few worries and they do not go in lockstep up, or down.

Like the Irish potato famine, anytime someone puts all their eggs in a single basket it is likely to come out badly for them.

Some states are welded on to governments that depend on people being self sufficient and they have been re-elected time and again, yet when something hits the fan people can be hard done by but will predictably re-elect those who may have been the ones denying them assistance.

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The replies are missing the point here.
Maybe I have invested unwisely. But that is irrelevant.
If I had lived a frivolous life, I would now be on a pension and have no problems.
The investment property is actually the flat we had planned to down-size to when we get too frail to maintain a yard. It worked well as an investment for 20 years.
But, regardless, after 3 months without income my cash reserves ran out.

During the pandemic there were many people, from all walks of life made incomeless. Some were caught by the welfare safety net, many were not. The system is not at all fair.
If the governments won’t let you earn an income, the very least they can do is ensure you have access to low interest loans to tide you over.
And why are credit card interest rates still so ridiculously high?

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I am sure there are many people in Victoria right now who are thinking the same as you. Through no fault of theirs they are without income because they are prevented from doing whatever they do to earn money.
And no Government support there.
Too much in the way of assets? No pension. Not disabled? No DSP. Jobkeeper, gone. Jobseeker, forget it if you have assets like a property.

And interest rates on credit cards at over 15%, when the reserve bank rate is below 1%, well that is another story.

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Comparing the circumstances of the extended family in or close to retirement.
The system appears to ensure those among us with a large amount of relative wealth, can wisely look after their own needs. And pass a large portion of those gains to the next generation.

The remainder (the greater majority) whether living with few assets and a pension or more are expected to consume that equity until the lowest common denominator is reached. Aged care with 15% of the aged pension paid to the recipient to fund all ‘non essential needs’? The 15% is intended to include clothing and medications.

Those with some super and a dwelling seem to be best served. Corn beef and potato mash the go. Just hope the house does not require painting or the car replacing.

Those with more than a modest amount of super or assets fail the income or assets tests, until such surplus is disposed of.

It’s less to do with Covid and more about

There are various experts assessments of how much a couple need to acquire in excess wealth to be better off in retirement. The numbers vary between $1M and $2M assuming the equity in the family home is also not tapped. Asset rich income poor is oft quoted.

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This is more or less the situation in which I find myself. I did not want to become dependent on the government too early, which I would have, had I persisted with full time work. So as my health began to deteriorate in the late 80s, I moved to part-time, and casual. As a casual at that time I had no access to super, and because of how the system worked when I left my fulll time position, I was paid out the super I had accrued (hardly anything at that stage)… anyway, eventually it got to the point where I had some super, and a house I was paying off, and when the balance of one more or less equalled the balance of the other, I stopped work, paid off the house and went on DSP (doc had been nagging me to do it for 4-5 years already at this time). I was 61, and took the poverty option because really, I had no other choice.

Being a house owner makes a huge difference to how you live. I cannot imagine still being a renter in today’s economic climate… I’d be one of those on the street. My house is tiny, but maintenance is still an issue. The Hot water system will need replacing before long, its already well past its due date, but its one of those things when on a pension, you do leave until you no longer have a choice… because other things need fixing like the loo which needs replacing now, and the internal walls which need painting, and the stove and fridge that need replacing.

My TV is 13 years old, my Macbook 11 years, and the car is a 2002 model which is beginning to cost much more each year to keep on the road, and additionally its not worth a penny to a pinch of snot so I am never going to be able to afford another car. I can only afford annual servicing (which was manufacturer recommended anyway) so I get that done, anything more will see me getting rid of it sooner rather than later. I’m lucky I have friends who want to help me get to medical appointments, which will be needed when I am no longer in a position to take myself.

I do keep up, phone-wise, but I think probably the current will be my last, and I have a midrange NBN service because that keeps me in touch with other people and whats going on in the world.

I pay a man to mow the lawns and do the edging and pull the odd weed from time to time, and I need help in the house but can’t yet get that.

I still consider myself fortunate to have been able to do the things I have done, and to own a house, even though its a box made of tickytacky, and to be on a full pension because at least there are some financial benefits to that (cheaper meds, I could never afford to have all of them when I was working… go figure). Life could be a whole lot worse.

Early morning… and I am rambling as usual.

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Have you sought independent financial advice? There are income and asset tests to determine if one qualifies for the pension/part pension.

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There are many who have not lived a frivolous life yet are on pensions, your comment reads like only those who lived frivolous lives are able to get pensions. So I disagree that frivolity is what makes a person a pensioner. As to having no problems on a pension? Not so and many who are renting live below functional poverty rates.

What we should all be asking is why we don’t have a National Income stream where everyone gets a rate of payment sufficient to live on, then those who wish to work or who have investment income can earn extra income that supports their lifestyle they wish to have. If anyone says get a job there are plenty out there, the simple answer is really there aren’t enough to employ everyone who are looking for one. We need more Social housing, we need better social health and we need really free education but I might as well wish it rained gold as that is the more likely to occur than those others to eventuate.

You advocate extra debt to see us through, we are already a heavily indebted population (personal debt not Govt debt), loans to survive would only make this situation worse.

As for Credit Card rates I can only agree they are terrible but no action will be taken to really rein this robbery in, it will remain business as usual.

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I regret starting this conversation.
It was not my intention to offend pensioners, I was one for a little while, until the rules changed.
I’m not poor, but had no cash-flow, and was ordered to stay home.
This was the biggest problem I ever had in 60 years of various levels of work.
My issue was quite simple: “If the Governments put you in a position where you can’t access money, it is reasonable that the Government offers effective support. That can be a welfare payment, or suspending the economy, or low interest loans.”
I had no problems with the need to lock down, but the financial arrangements were abysmal.
For example, A son of one of my friends was stood down without pay, his employer had run out of money before job keeper started. To qualify for welfare, that young father of 3 had to go out in the middle of a pandemic, seeking work. All he needed was some welfare until his employer could resume trading. He had a job. He shouldn’t have had to risk his health seeking a new one.

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I say we always need a National Income system that pays everyone a set amount regardless of other income. An amount that no matter how little if at all you are able to work or how much extra you do, it continues. So I agree that the Govt should provide effective support but I again think Loans are a dangerous path. They in a way preference those who can afford more and disadvantage those who cannot. They create division and even discord. I see today the Fed Govt are making payments again to those who lack work due to COVID lockdowns and this is as it should be in my opinion, they as workers or stay at home parents have no other alternative to paying for their needs. There is too much Job Insecurity, too much Casual rather than Permanent work, there are too many who have to work multiple jobs to even stay afloat, there is too much Employer greed/desire for profit rather than paying and employing in fair conditions.

So yes, our Govts fail many of us, the population however continue to vote for Party Politics without really holding them to account. That’s where many of the problems we face lie at the feet of.

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With the latest Victorian lockdown, the Federal Government has promised financial support, but only to people with assets of less than $10,000.
Where is the mechanism for the people with assets to access cash?
After 3 lockdowns there won’t be too many investors sitting around with cash on hand.
And you can’t just run out and sell one of your motel rooms, or your commercial kitchen or your investment property when everybody is supposed to be staying at home.

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There is a mechanism:

The $10,000 applies to liquid assets, which are cash or things that can be readily converted to cash (shares, recouping loans to others etc).

If you have more than $10,000 in assets which aren’t ‘liquid’ and under $10,00 for those which are, then one would quality for the emergency payment. I also suspect that the government/ATO will be monitoring the conversion of cash/liquid assets to non-liquid assets as from yesterday to prevent those with sufficient liquid assets changing them for the sole purpose of obtaining the emergency payment.

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Fact is we have $1.8 Mn cash able to be invested, best income we can get from investing in any type of account is about $800 per month and only for 6 months (average offer works out to $15 yes $15 per month). If we wish to take higher risk then we can earn more but with higher risk of losing it. Property seems currently about the only investment where rates of return beat inflation. It then is eggs all in one basket so again risky.

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Thank-you for that.

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Yes, property was all of significance I was left with after 1987 and 2008. My major holdings, in companies I had worked for or was working for, on both occasions, were decimated. Property was the sole survivor.

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As a self funded retiree, I wouldn’t qualify. In New Zealand I would get the aged pension regardless of my investment status.

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You also possibly need to be in Victoria.

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