Why are so many retirees still spending like it’s 1991?
Idea
Imagine someone who is 10 years away from retirement and is afraid of going beyond the government’s minimum cut. Their pensions are well above the national average and they own their own home.
They might be comfortable, but instead they’re living like it was during the 1991 recession. They skip a trip to see their grandchildren abroad, fix a car that could have been replaced years ago, and turn down the heating a bit each winter to maintain a super balance that they’ll almost certainly never waste.
This is not a rare story. It’s happening in kitchens and living rooms all over Australia. Here’s the hard part: 33 years ago Australia launched one of the most successful financial experiments in the world; We’ve pushed every Australian to save for retirement.
Most people don’t realize that this works wonderfully; It provided everyone who worked with some savings that they could use when they retired. But we never explained this to the people who lived it.
In fact, the tremendous success of the pension system has created a new pension problem that we do not discuss enough; People don’t know how to manage their money so they can spend it safely.
Most people in Australia don’t see themselves as having saved for retirement. You saved almost by accident. It was deducted from your paycheck before you even saw it, it went into an account you probably didn’t check for years, and it grew as you continued living your life – just like the experiment was supposed to work, but better.
We are a nation of excellent savers and terrible spenders, and it’s not really our fault.
You didn’t get a financial plan or understand what you were investing in. You just haven’t touched it and it seems that will be enough for most average Australians.
Apart from that, most Australians are sitting on a decent-sized pile of money and few are truly prepared for how they will spend it.
This was the part of the retirement journey that the industry didn’t really expect to be a problem. Learning to spend after a lifetime of saving was never something people felt they needed to figure out. It seems crazy that this is our country’s next real retirement challenge, and we barely even talk about it.
But it is. And this shows up in very significant numbers. Only a third of retirees say they are leaving a job because they have reached retirement age or become eligible for a pension, according to ABS Retirement Intentions data.
The rest left due to ill health, layoffs, or circumstances that were not part of any plan. This is a symptom of a consumer who doesn’t understand their choices and likely doesn’t have much of a plan for what happens after they leave the workforce.
Retirement confidence data tells us a similar story. According to the AMP Retirement Confidence Pulse (2025), retirement confidence in Australia stands at just 50 per cent. It doesn’t tell us why, but my own teaching has shown me that for most people it’s a lack of understanding of how pensions and age pensions, the two main sources of income for retirement, actually work and how they can be turned into reliable retirement income.
This tells me that rather than hiding this behind the “you need advice to understand” veil of secrecy that has long surrounded retirement, we can provide greater confidence by giving people a real sense of what it means to be super and how it can be used to build a good life.
We are a nation of excellent savers and terrible spenders, and it’s not really our fault. No one has ever shown us how to save money; they did this for us. So no one has shown us how to spend and how to invest those retirement savings as intended, nor how to handle our expenses and then enjoy them along with the excess. No one prepared us for the day when this could be an election.
I hear a version of the same question over and over in my Epic Retirement courses. Someone with a perfectly functioning super balance and access to a part-age pension, terrified and making anxious sums in the back of an envelope, assumes the worst because no-one gives them guidance on how much their super, often called account-based superannuation, will pay over time and how much they can take out of their age pension.
And they certainly weren’t shown the currently available products that guarantee they won’t outlast their money, which would likely give them access to greater retirement and a secure income for life.
Most people aren’t broke. They are just ignorant, unaware of things they don’t know yet. Some people can’t afford advice. Others simply don’t realize that they can choose to educate themselves.
The next big challenge in retirement, it seems, is teaching people how to use the money we help them save and giving them the tools and financial products that will enable them to do so safely for the rest of their lives.
This isn’t something most people will solve by building a personal relationship with a financial advisor because most Australians will never sit across a financial advisor’s desk. And that’s unlikely to change any time soon.
So the question is not who will advise us to solve this new-age retirement problem. This is what happened You Want to learn, understand your options, and put frameworks in place to help you spend?
Here’s where I’ll start:
- Work out what your super balance could actually turn into in terms of annual income, not just at the lowest withdrawal rate. Log in to your fund, check your balance and go to the retirement calculator if you have it, or the Moneysmart retirement income calculator if you don’t. Enter your balance and let it show you how much your retirement can actually pay.
- Find out how much you are entitled to from the age pension, even if you think you earn or have too much to qualify. A partial pension changes the whole equation because it often means you can withdraw your pension more quickly and still have a safety net under you. Use: Services Australia payment and service finder, or call the Financial Information Service, which is run exclusively by Centrelink and is free, to help you understand before you make any decisions.
- Ask your retirement fund directly if it offers a retirement income product that guarantees you an income you won’t last long. and that you can include it in your retirement income on top of your account-based pension. Most funds now have a partnership with one or another such provider, but almost no one asks because almost no one knows about them, the age pension benefits that surround them, and how to use them as a tool to give you more confidence in spending.
- And finally, give yourself the tools and permission to actually spend without fear. Create an affordable retirement budget. Calculate how much your regular expenses are and how much you want to spend on the good parts of life. Align this with your income sources and what you can afford. Then, set up a regular paycheck from your retirement fund to your spending account, which will make it easier for you to see and choose a better life than your fears might allow.
This will help you turn fear into a plan, rather than letting fear drive your reality.
Bec Wilson is the bestselling author How to Have an Epic Retirement and new releases Prime Time: 27 Lessons for the New Middle Life. Writes a weekly newsletter epicretirement.net and hosts prime time podcast.
- The advice given in this article is general in nature and is not intended to influence readers’ decisions about investments or financial products. They should always seek their own professional advice, taking into account their personal circumstances, before making any financial decisions.
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Bec Wilson is the author of How to Have an Epic Retirement and writes a weekly newsletter for pre- and post-retirees at epicretirement.net.
