Retirees: Planning to spend is just as important as saving

03 May 2019

planning the spending

One our greatest fears is that we won't have enough money for a comfortable retirement. But, research from the CSIRO has suggested that the majority of retirees are being so conservative with their spending that they are dying with very healthy super balances¹ - far from money running during retirement. Why would this be happening? Are retirees taking their good money habits to the extreme - living too frugally when they could be living the enjoyable retirement that they worked so hard for?

This could be one factor: retirees must withdraw a minimum amount of their super each year as a pension to be able to claim a tax exemption on super earnings. This is currently 5% for those aged 65-74 and is rising incrementally to 14% for those aged 95 or more. The CSIRO believes that decisions about spending and saving for the future can be so difficult that retirees are selecting the minimum pension payment as a very conservative option.

Some retirees are even dying with more in their super accounts than when they retired because their accounts are growing faster than they can spend it. So, while the minimum pension amount may well suit some retirees, it is clearly not necessarily appropriate for all.

Having access to sufficient retirement savings is one thing, but the CSIRO suggests there is a need for people to plan how they'll spend their retirement savings, not just withdraw the minimum pension amount and live within it.

We are getting the message from all over to save as much as we can, but equally important are decisions about what we are going to do with the savings in the future. Planning retirement spending doesn't have to be daunting - for those of us who don't know where to start, thorough financial advice can be a benefit. We each need to be educated enough to seek the right adviser, ask the right questions, and be satisfied we are getting the best possible advice for our personal situation.


BUSSQ members have access to personal financial advice at no extra cost*. Tailored retirement advice is also available and charged on a fee for service basis^.

*Personal advice is limited to BUSSQ products and is advice on insurance, investment choice, contributions and retirement. The cost of this advice is included in the BUSSQ Trustee related costs. ^Tailored retirement advice is advice on retirement income streams and transition to retirement. As this advice extends beyond a member’s BUSSQ super account  it is billed on a per hour basis. Advice is provided by Link Advice Pty Ltd (ABN 36 105 811 836 AFSL 258145).

¹Source: Based on data from the Australian Taxation Office (ATO) and super funds, 2004

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