How not to die with retirement regret

Australia ranks in the top five countries in the world for ‘retirement security’ in the 2022 Natixis Global Retirement Index. But one in four older Australians dies with their super intact.

The terms ‘retirement regret’ and ‘regret risk’ have, sadly, become part of the language.

Patrick Clarke, general manager at investment bonds provider Generation Life, explains that ‘regret risk’ occurs when retirees live more frugally than they need to because they’re concerned about running out of money.

Research shows that in their later years these people often look back with regret. They wonder why they didn’t spend more money when they could better enjoy themselves and were more active, he says.

We asked Mr Clarke how you can overcome ‘regret risk’.


YourLifeChoices: The big questions are, ‘How much do I need’ with ‘How long will I live’. Does that mean retirement regret is virtually guaranteed?

Patrick Clarke: Retirement regret isn’t guaranteed at all. The introduction of new solutions that advisers can leverage for their clients means that retirement savings can be deployed more efficiently and more effectively than ever.

Through the use of a lifetime annuity for instance, professional advisers can reduce both longevity and regret risks.

People tend to overestimate the amount they will need to cover medical expenses. Some also underestimate how much government support they will be entitled to in their later years. Sadly, this means that many retirees are passing away with large sums of money and in their later years, regret around what they should have spent their money on – what we call ‘regret risk’.

Read: Super funds need to shift their focus: review

There are better ways to control and manage retirement income. An adviser can help you to make the most of your hard-earned savings over the long term.

How can we get the best possible answer to, ‘How much do I need?’

PC: It is a tough question to answer because spending in retirement is rarely linear. It’s very much driven by individual circumstances, wants and needs.

The earlier years of retirement are when people are most likely to want to tick off larger bucket list items: extravagant overseas holidays, year-long round-the-world trips, spending quality time with grandchildren, relocating to far-flung destinations, or even taking up new hobbies.

As mobility and energy levels start to decline in their later years, that’s when spending also decreases.

By working with your adviser to understand what you will need in the earlier years of retirement, you can effectively plan and maximise your retirement income.

Read: Is adjusting to retirement easier for men or women?

Based on your situation, an adviser can recommend a combination of an account-based pension, an investment-linked lifetime annuity, and other investment options to ensure you maintain a great quality of life, no matter the life stage.

There are longevity calculators, but are they keeping pace with medical breakthroughs?

PC: The longevity calculator with which I am most familiar is the Optimum Pensions LifeSpan Calculator. Optimum Pensions are retirement income specialists and superannuation actuaries. They have worked with one of the world’s leading reinsurers to develop their calculator and it includes an allowance for medical enhancements increasing.

Medical breakthroughs occur sporadically. The calculator is updated annually to pick up changes in life expectancies through a number of data sources including the Australian Life Tables published by the Australian Government Actuary.

We save into super (and maybe salary sacrifice) all our working lives and then we’re expected to spend. What needs to happen so we can make that transition?

PC: Anecdotally, we are seeing that there isn’t an immediate point of crossover where people transition from saving to spending. It’s more of a gradual transition.

Australians tend to reduce their working hours over time, dropping from full-time work to part time to perhaps freelancing before retiring fully. Understandably, people are often quite anxious about retirement and losing their money in changing economic conditions. Continuing to work, even in a reduced capacity, provides peace of mind.

The best thing to do is to start thinking about retirement at least five years out from the planned date. Then work back from there with your adviser.

Ask yourself what you will need to make that gradual shift away from earning an income from employment to earning an income from your savings and investments.

Preparation is important and so is educating yourself on the options that may be available to you.

It seems annuities or hybrid-type annuities are coming of age. What has changed?

PC: We’re calling this the ‘new era of lifetime annuities’. It’s a really exciting time in the industry as clients demand more innovative, tailored investment options.

Read: Funds costing members billions

Traditionally, the rules around lifetime annuities made them quite inflexible and expensive. In 2017, there were some regulatory changes in Australia that enabled providers and super funds to develop new solutions that were a far more attractive proposition to consumers.

At Generation Life, we’ve introduced a unique lifetime annuity solution that offers a choice of professionally managed investment options. This means that an adviser can adapt their client’s investment portfolio according to their changing lifestyle needs or changes in the market – flexibility that lends itself well to turbulent economic times.

Another feature we’re proud of is the ability to redistribute lifetime annuities income to a client’s earlier, more active years, when they need it the most. We’re on a mission to offer more income, more choice and more flexibility in retirement planning.

Are you afraid of running out of money in retirement? Do you have a plan to avoid ‘retirement regret’? Why not share your thoughts in the comments section below?

Janelle Ward
Janelle Ward
Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.


  1. There’s a little thing called Covid that since 2020 has kept most of us retirees cocooned in the hope of not contracting it. We travelled in 2015, 2017 and 2019 and since then have not done anything of consequence, but both of us have recently contracted Covid and still recovering.

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