Are you spending too little in retirement?t

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We are used to reporting on ways to spend less and save your money, but there are some retirees who need to know when to loosen those purse strings.

It seems counter-intuitive that after years and decades of saving for your retirement that you might have the opposite problem once you have stopped working.

However, there are some Australians who have become so good at saving for retirement that they forget about the goal they were saving for – living comfortably in their golden years.

If you have accumulated a large nest egg for your retirement, you’ll have a lot of money to manage, potentially more money than you have managed at any other stage of your life. While some people will be lured into overspending with this illusion of wealth, there are others who have been so rigid with their saving plan, they find it difficult to switch to spending mode.

While the problem is at the opposite end of the spectrum to those retirees who are spending too much, the solution can be the same – a budget.

Start by giving yourself an annual salary. You will need to estimate the length of time you will need your money to last and you are always better planning on a long time, rather than a short time. Once you have figured that out, you can allocate a yearly spending figure that will make sure your savings last comfortably and ensure you won’t run out of money.

This figure can then be broken down into a monthly allowance, which will help you think about transitioning from an accumulation strategy, used when saving for retirement, to a decumulation mindset, when spending through retirement.

Signs you are spending too little

You live like a recluse
Retirement is supposed to be fun. You should be visiting friends and grandchildren, traveling, eating out and all those activities you couldn’t do when you were working full time. If you are not doing the things you love because you are afraid of spending the money, you might be saving too much. You are also healthier and more mobile when you are early in your retirement and you want to make sure you make hay while the sun shines, because that may not always be the case.

You are suffering instead of spending
If you or your spouse have a bad back, buy a better mattress. How about seeing a personal trainer to keep you mobile and healthy longer? Or ticking some items off your bucket list? Just because an item seems expensive, it doesn’t mean it will send you straight to the poor house. If an object or experience can improve your quality of life, you should consider it an investment, even if it is not a necessity.

Do you have a budget? Are you still locked in a saving mindset? 

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Spending the inheritance

In the recently released Apia Life begins at 50 report, 70% of baby boomer respondents said they

Retirement: are you spending more than you planned?

It can be tempting to splurge on living the good life as soon as you retire.

As retirement progresses, your spending will change

Living longer than previous generations comes at a price.

Written by Ben


Total Comments: 37
  1. 0

    I think a lot of US worry we will run out of money(apart from the pension)
    Personally I go from saying oh f–K it YOU CAN`T TAKE IT WITH YOU!TO
    DEPENDS on who`s passed away thatweek!

  2. 0

    I think a lot of US worry we will run out of money(apart from the pension)
    Personally I go from saying oh f–K it YOU CAN`T TAKE IT WITH YOU!TO
    DEPENDS on who`s passed away thatweek!

  3. 0

    Not much point in being a scrooge really. The government is just determined to take it all off anyone who still has some in retirement, and having anything makes you the target of all sorts of abuse and denigration from those who didn’t save.

  4. 0

    whats retirement? whats superannuation ??? for those of us not considered to be workers we don’t have either of these to look forward to

  5. 0

    I wonder how pensioners afford to pay plumbers $100+ for a 5 minute job to fix a leaky tap? Whilst I was working it took me almost a day’s work to earn that amount.


  6. 0

    General agreement with the philosophy of this article.

    Having gone without for most of our life so that we could have a decent retirement, then getting kicked in the guts by the Libs (and Greens) and now Labor, we have decided to spend what we have (up to a point) so that we qualify for the part pension.

    We will spend most of it overseas on travel and holidays, rather than here on “stuff”. Idiots in govts did’t think of that, did they. As for leaving it to the kids, well, best of luck. They can fight over the house and the wheelbarrow if they want, but there won’t be a lot of cash left over….

    • 0

      Janus, you don’t have to spend it on “stuff”. You can travel first class within Australia and see all the places you have not seen.
      The Indian Pacific train is a great way to spend money and there are connecting boat trips to the Kimberley from the end of the line.
      Overseas is too crowded and too far from home if you get sick.

  7. 0

    Tricky one this; When I moved into a Retirement Village, from a house; realising that the 30% exit fee would take a big chunk out of my selling price. I put leftover cash in the bank for the purpose of; when I’m unable to care for myself I would have a decent amount to buy into a care facility. The DSS got onto this charging me $680.00 for overpayment (I was unaware that I was being overpaid) and they reduced my age pension. I like many worked hard for my money, never wasted it spent wisely and saved. The government had already stolen my money by using the 7.5% they had been stopping from my wages supposedly for our Age Pension. Transferring us all to the present system where our pension contributions plus income tax are forgotten.

    • 0

      Mmmm… before anyone changes their financial circumstances, they should check what the implications would be. A good friend of mine sold his house that was solely in his name, but morally belonged to both his (separated) wife and him. He bought another house in his (separated) wife’s name, for her to occupy, and became a grey nomad. He lost over half his pension because he had ‘gifted’ more than the allowed amount! Think before you do, folks.

  8. 0

    If seems the more money I spend the more I make. I just wished I had retires years before I did as retirement is so much more lucrative than working.

  9. 0

    You need to budget for a rainy day like health care which can costs a fortune,Repair jobs can cost a great deal of money. You can learn to do minor repair jobs yourself or find someone you know who knows how to fix B small repair jobs,. If you rent then the landlord is responsible for repair jobs. Ben is right .Pensioners do need to enjoy themselves . otherwise life will pass by, There are things that people can do that do not cost the earth.

    • 0

      Yes KB, health insurance is a must have. Hurts like hell but every year we pay that $4800 or so for next year’s premium, body corp and council rates yearly as well and the rest goes on things we like as well as food and grog. The smokes and the gambling we leave alone but that was not always the case. Something had to give.

    • 0

      But KB, you CAN’T budget for a rainy day because the stupid government takes your savings. Hand out to those who have nothing – well, not much, and not enough, but a handout that costs the nation – and persecute those who save so that they give up and put their hands out as well. STUPID.

    • 0

      That’s the OGR I remember, denigrate the pensioners and try to turn the tables so you are the victim and the poor are oppressing you.
      Sometimes you come across as half decent with compassion but you or your alter ego go on the attack against the pensioners who have every right to their pension after a lifetime of paying taxes.
      Good luck to you if you have more but don’t attack people who draw a pension because they have every right to it.

  10. 0

    Unlike retirees of the last generation there is a finite bucket of money in our retirement fund.

    What we don’t have is a fixed date of death. The government on the other hand insists we draw down 5% p.a. out of our super fund increasing as we age. The expectation is that we will all need the pension at 85. Since that is 10 years short of life expectancy – we must save!
    The most difficult thing about saving is inflation and government tax theft.

    So do all the house repairs as early as possible and get a new car on retirement – because nothing will get cheaper.

    • 0

      Just because you draw it down you don’t have to spend it. I draw mine down and invest it as I don’t need it.

    • 0

      you will more incentive to save the excess drawdown and reinvest in shares as you will get the franking credits back if the income is outside super

      Silly Shortsighted Shorten

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