Why retirees are too conservative with their spending

Font Size:

There’s been a body of research and a number of articles to suggest retirees are too conservative with their spending, particularly in the early years of retirement.

In Household Capital’s experience, that’s quite true.

Australians can now expect to have a healthy, active retirement for a longer period of time. It’s not at all unusual for retirees to have twenty or thirty years post-work years. If they have all this time on their hands, why then are they not spending their super?

There are two very good reasons for this.

Firstly, no one knows how long they’ll live. Planning when and how to spend your last cent is next to impossible. This is why many retirees try to maintain a savings buffer for their later years.

Secondly, major expenses can be expected throughout retirement, many of which are unforeseen and most of which couldn’t be funded by a pension. Whether it’s modifying your home to make it safe and comfortable as you age, meeting significant medical expenses or funding the transition to aged care, access to capital is important in retirement. Keeping some ‘rainy day’ funds is a form of contingency insurance.

Each and every retiree’s experience and circumstances are unique; very few people can plan their retirement perfectly. There’s no way to foresee the duration of a given retirement or the costs that will arise along the way.

Using home equity to complement super and the age pension can help you live a more active lifestyle and enjoy greater wellbeing. 

If you’d like to spend more today but would sleep easier knowing you had a ‘rainy day’ fund to fall back on, try this calculator to see how a Household Transfer® could improve your retirement funding and help you to Live Well At Home.

Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable and terms and conditions apply (available upon request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434, Australian Credit Licence 391876.

Join YourLifeChoices today
and get this free eBook!

Join
By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy

Written by Sponsored Content

6 Comments

Total Comments: 6
  1. 0
    0

    Has no-one else posted a comment? I have a “meagre” amount of savings, and I am fearful of spending too much. Maybe I’m worrying too much about spending cents instead of dollars, but even though I have a slight buffer, I worry constantly. The cutting of interest is striking fear into my heart. Savings have flatlined.

  2. 0
    0

    Maybe there are few comments because there is little to add to the answers already given.

    “Firstly, no one knows how long they’ll live.” Yep.

    “Secondly, … keeping some ‘rainy day’ funds is a form of contingency insurance.” Yep.

    Perhaps some don’t spend because they have no wish to purchase more stuff. Many retirees are more into downsizing and culling stuff rather than accumulating more at this stage of life.

  3. 0
    0

    How about we borrow from the equity of the principal home to buy a cheap house to rent out and the rent received can be used to pay back the reverse mortgage? Wonder if that is even possible?


FACEBOOK COMMENTS



SPONSORED LINKS

continue reading

Health news

Doctors call for convicted child killer Kathleen Folbigg's release

A group of 90 expert scientists and doctors is calling for convicted child killer Kathleen Folbigg to be pardoned in...

Lifestyle

Adorable celebrity pets

Just like the rest of us, Hollywood's A-listers are pretty obsessed with their pets, especially when it comes to sharing...

Health news

Who needs a colonoscopy most? Ensuring those at risk head the queue

Professor Jon Emery Mary was 55 when she started having on and off tummy pains, and noticed she needed to...

Health & Ageing

What stress does to your skin, hair and nails

Stress can be an all-consuming beast. Not only does it overwhelm your brain, but it can have a physical impact,...

Property

Multi-generational family living grows, forcing design changes

The trend towards multi-generational living, accelerated by the COVID-19 pandemic, is producing fresh approaches to Australian housing. Urban designer Craig...

Seniors Finance

Your retirement 'pay cheque'

Nothing beats the reassurance of knowing there's money coming in each month. Then retirement happens and, suddenly, it's up to...

Health news

Scientists closer to developing a vaccine for urinary tract infections

Anyone who has ever developed a urinary tract infection (UTI) knows that it can be painful, pesky and persistent, but...

News

Alarming spike in elder abuse during pandemic

A frightening rise in elder abuse during the pandemic is being reported across Australia. And some of the perpetrators are...

LOADING MORE ARTICLE...