Fear of running out of money in retirement is real

There’s a lot of advice going around about how much you should have in your super and how you should spend it, but is that taking into account the reality for many older Australians?

There are claims that many retirees are holding onto their wealth and not spending enough, leaving the vast majority of their estate intact.

However, for many older Australians who did not accumulate super during their entire working life – it started in 1992 – there is a fear of running out of money and being forced into living in penury. And that’s not without basis.

Aware Super chief executive Deanne Stewart says the fear of running out of money is compounded by confusion over Australia’s retirement system.

No super

“So, with all this talk in the press at the moment of money being hoarded and passed down the next generation, I think you’d go ‘Oh, that must be all about estate planning’,” she said.

“No. Actually, the facts are very different on the ground. More than 80 per cent of those who are 80 or above do not have any super in their last four years. So, there’s a lot of myths that are out there.”

According to research from the Association of Superannuation Funds of Australia for women, the impact was even greater. Only 15 per cent of females aged over 60 passed away with any super savings, compared to 25 per cent of men.

In the YourLifeChoices Insight Survey, more than 50 per cent of respondents did not think they had enough money for their retirement and almost 60 per cent believed they did not have enough savings for an income for life.

So what is putting people’s retirement at risk?

Many people are simply outliving their retirement funds and have to go on the Age Pension.

That’s not great news for an ageing population.

The average life span in Australia now stands at 83.2 years and, according to the Australian Institute of Health and Welfare, over the past five decades life expectancy in Australia has increased by 13.7 years for males (to 81.3) and by 11.2 years for females (to 85.4).

Market fluctuations can also affect the value of your superannuation investments, and inflation and the cost of living may negate any conservative investment choices such as cash in the bank.

Other issues include retiring too early, underestimating your retirement living costs, not contributing enough to your super while you are working and healthcare costs.

So what can you do?

One simple issue to resolve is that many Australians are not moving into their retirement phase on their super. That’s a problem because the accumulation phase incurs a 15 per cent tax but the retirement rate is zero.

Work with what you have.

It may also be a good idea to consult a financial planner. A financial planner can help set goals through strategies to maximise your income, or even just set more realistic goals.

Some people are put off by the cost, but, according to a Findex report, clients stand to gain 8 to 29 per cent in benefits depending on which age they start.

If you don’t believe you can afford a financial planner, there are still plenty of resources to help you begin your retirement planning or resetting your finances. A good place to start is with the retirement guides on MoneySmart.

Free advice

Your super fund should offer free online resources and also offer low-cost one-on-one sessions. Your union and bank may also offer advice.

Services Australia holds financial service webinars and there is a wealth of information available by simply doing an online search for ‘free’ advice.

And check if you are eligible for any Centrelink payments such as a part Age Pension and government concession cards.

Do you think you have enough to retire? If not, have you done anything about it? Why not share your experience in the comments section below?

Also read: Rise in older divorce threatening retirements

Jan Fisher
Jan Fisherhttp://www.yourlifechoices.com.au/author/JanFisher
Accomplished journalist, feature writer and sub-editor with impressive knowledge of the retirement landscape, including retirement income, issues that affect Australians planning and living in retirement, and answering YLC members' Age Pension and Centrelink questions. She has also developed a passion for travel and lifestyle writing and is fast becoming a supermarket savings 'guru'.


  1. The Retirement Income Review (2020) stated there are 3 Pillars of income in retirement.
    – Superannuation
    -Age Pension
    -Personal investment and home equity

    For any retiree owning their home, there should never be a concern about funding retirement.
    Let’s take the following example.
    A 73 year old single woman, on the full age pension of $1094 p/f, no savings and a home valued at $700,000.
    She could access $500 p/f as a Government reverse mortgage for 15 years – no income tax and no pension reduction.
    Based on a conservative 3% growth per annum, at the age of 87 her home is valued at $1.090m, her loan is $290K (based on an average 5% per annum interest rate) and her net equity is $800k ($100k more than it is currently). She has lifetime tenancy and is able to fund her needs to a reasonable standard.
    $800k is clearly sufficient to pay for residential aged care and leave an inheritance.

    • You are so right Twig,, and of the 3 Pillars, owning your own home is the key one as you have illustrated.
      We are looking at adapting a similar strategy in a few years time and as our SMSF runs down in value ( some withdrawal to fund home improvements) , we will move out of Super altogether, dispensing with compliance fees and minimum draw downs and utilise split income rates along with past accumulated personal capital losses to offset any CG.or personal income tax issues that may occur.
      Accept that not all are in a position to utilise all available strategies and care is needed with ever changing Government regulations .
      However the facts are ,you can still live responsibly comfortably if you are prepared to explore all options ,again subject to changing regulations.

  2. Many self funded retirees separated by illness but having to fund Agedcare home fees and also the expenses of their own residence keep capital because of the capital required iin the event they fall Ill and need to also be confined to Agedcare .
    They are already means tested on their partner who is in care ,they earn less than the pension , but are ruled out via a very cruel assets tested means test which actually favours those retirees who have large super but makes it hard for those who are at the smaller super end.
    A house sale is not a viable option as ,for elderly people a large portion of the rocked just increases the means test tax leave.
    Also neighbours play a big part in an elderly person living alone.
    They are so helpful.
    Also Drs,chemists etc who one builds up confidence in provide comfort to a person living alone.
    Superannuation should not be a vehicle for Governments to means test when older people become I’ll.
    These stories I read about super should stand in a person who has a partner with dementia.
    This rubbish about Govt saying priority should be given to those who remain at home is just awful.
    We all want our partners to live at home but when The services cannot be provided due to severe decline in illness surely that’s when Govt should have a heart.
    Neither side seems to understand.
    Have a nice day.

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