We often worry about people running out of money in retirement. But in my latest article for Firstlinks, I look at the opposite problem, and one I think deserves far more attention: under-retiring. Many older Australians may be living a smaller, more careful life than they need to, simply because they can’t picture what the future will cost.

Together with Challenger, we surveyed 1,011 Australians aged 60 to 80, all with at least $100,000 in super.

A third of retirees (34%) felt confident predicting their spending over the next year or two. Stretch that out to ten years, and the figure dropped to just 11%. Among people approaching retirement, almost half (46%) worried their money would run out. That uncertainty doesn’t stay in the future. It shapes the choices people make today.

We found four distinct retirement lifestyles: Carefree, Content, Cautious and Concerned. On paper, some of them look alike, because the people in them spend less. But the reasons are very different. Someone who is Content spends less because a simpler life is exactly what they want. Someone who is Cautious holds back because they’re not sure their savings will last. And for someone who is Concerned, a tight budget often isn’t a choice at all. If we only look at how much people spend, we miss why.

What struck me most was that people with very similar finances were often making completely different decisions about how to live. Retirement can last thirty years, and people move between these lifestyles as their health, priorities and circumstances change.

So my view is this: retirement conversations should start with the life someone wants, the worries shaping their decisions, and the guidance that would help them feel more confident. A super balance can’t tell us any of that.

Read the full article on Firstlinks →