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A close look at retiree fears and expectations

For many, the word ‘retirement’ is associated with extended holidays to far-flung locations or spending quality time with grandchildren. And while the new-found status of ‘retiree’ sits well with some, for others it’s a different story. It depends on how smoothly the transition into retirement progresses. There are, in fact, a range of financial, emotional and psychological fears that are often linked to retirement – for good reason.

Australians spend most of their working lives saving for their retirement so that when the time comes to retire, they can lead a comfortable life. However, many people are uncertain about what to expect in retirement, and the issues they may face are not always just financial. For many investors, financial planners play a pivotal role in providing technical advice, guidance and peace of mind before, during and after the retirement process. But there are also the emotional and psychological impacts of transitioning to retirement to be considered.

Despite the best laid plans and the most strongly-held expectations, research from CoreData found that around 50% of Australians retire early due to unexpected circumstances and within timeframes they did not choose. The reasons range from health issues to unemployment to providing care to loved ones. This can result in retirees feeling out of control and impacted not only financially, but emotionally as well.

Retirement planning is not a ‘one size fits all’ approach.

Common fears and expectations associated with retirement

While it is not surprising that pre-retirees with no superannuation savings are worried about funding their retirement, they are not the only cohort concerned. Despite healthy superannuation balances, CoreData’s research shows that close to two-thirds of pre-retirees are worried about being able to fund their retirement, with only a small percentage feeling very optimistic that they will have adequate financial resources to do everything they want in retirement.

In fact, more than half of those with retirement balances of between $750,000-$1 million say they worry about funding their retirement. These concerns only recede once an individual has accumulated more than $1 million in savings.

Encouragingly though, 44% of pre-retirees expect to live a reasonable retirement life, understanding that not all of their desires will be fulfilled. Only four in 10 retirees say that their actual retirement lifestyle is aligned with what they expected, and three in 10 say their retirement lifestyle exceeds their expectations.

Successful retirement factors

A successful retirement involves more than just money. Other important factors in a successful retirement include, mental and physical health, having realistic expectations and owning a home.

Retirement satisfaction occurs when a retirement lifestyle matches the retiree’s expectations. Not every retiree has expectations of a luxurious retirement lifestyle but all of them expect basic needs to be addressed.

Once a person is retired, the concern turns to whether they will run out of savings later in life. Around one in eight say their greatest worry is they will outlive their savings, and close to 10% are worried about affording the costs of high-quality aged care facilities. While the welfare system allows for a basic level of income, budgeting for discretionary expenditure can cause stress.

Having adequate savings in place allows for a degree of flexibility when it comes to discretionary spending and provides a stronger sense of control.

When planning for retirement there are two core factors that determine the amount of savings a retiree needs - life expectancy and projected expenses. Other factors including marital status, health and home ownership when determining how much in savings a retiree needs in order to enjoy their desired lifestyle.

Staying healthy

Early retirement is often seen in a favourable light and is eagerly planned for, however 28% of Australians retire early and unexpectedly due to health-related issues. Almost half of all retirees consider their health as their greatest worry in retirement.

Research from the Australian Centre of Financial Studies found those who retire early due to health issues are likely to have lower incomes and are more likely to have lower superannuation balances. By default, they are also most likely to incur additional health-related expenses in retirement.

Maintaining a healthy lifestyle and addressing potential health issues early are therefore important factors to consider when planning for retirement.

Owning a home

Unsurprisingly, owning a mortgage-free home provides a greater sense of security and retirement satisfaction. Research from the Australian Housing and Urban Research Institute found older people with secure long-term accommodation tend to have better physical and mental health too.

Home ownership is also intrinsically linked to retirement readiness and satisfaction. Those who own more than one property with no mortgage typically experience retirement success. Single property owners also enjoy a high level of retirement satisfaction. In contrast, individuals who own no property score the lowest in terms of retirement satisfaction.

Retirement is one of the larger changes in an individual’s life and it comes with a host of financial, emotional and psychological fears. A sound financial plan can help manage associated fears and expectations and most importantly, ensure the transition into retirement is as seamless as possible.


Richard Dinham is Head of Client Solutions and Retirement at Fidelity International, a sponsor of Firstlinks. This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL 409340 (‘Fidelity Australia’), a member of the FIL Limited group of companies commonly known as Fidelity International. This document is intended as general information only. You should consider the relevant Product Disclosure Statement available on our website

For more articles and papers from Fidelity, please click here.

© 2021 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited. FD18634.


November 17, 2022


February 24, 2021

Its interesting that most pre-retirees are worried about whether they will have enough and the retirees were much more interested in their health. Makes sense.

Getting people to drawdown super quicker makes sense. I'm not sure reduced drawdown rates in GFC and covid are helpful. The 17% "death tax" on undrawn super has not been mentioned. Maybe it should be better publicised, and maybe tweaked, to encourage drawdowns.

February 07, 2021

Instead of relying on the future taxpayer, we've tried to provide for ourselves. It's important to keep home ownership relatively high, because people will not look after a property that is not theirs (think Communist countries). We have that balance about right. But home ownership can never be available to all. Some will have to rent. The bank cannot loan money to those who cannot repay it. Because it is not bank money. It is our savings. The savings of workers at risk. Reference: GFC.

Graham Hand
February 07, 2021

To Robert, the Retirement Income Review says: "Most retirees die with the bulk of their wealth intact." You'll need to look through it for the exact numbers:

February 07, 2021

Goodness! So much angst, bitterness and resentment. If you have managed to accumulate a decent amount to retire with, then you will probably have developed the skills to use the "nest egg" wisely and well in your retirement. [And you will NOT be a "burden on the tax-payer" ..well done] If you haven't managed to accumulate a decent "nest egg" then you will probably also struggle in retirement ! The simple transition from employed to retired will not suddenly endow you with skills that you lacked before! It is too late to start envying the financial position of other "more prudent people" , come retirement , as though , somehow, their good fortune has caused your misfortune! You need to start early, plan in advance and make sacrifices in the present to ensure rewards in the future. "Retirement comes with a host of financial, emotional and psychological fears. A sound financial plan can help manage associated fears and expectations and most importantly, ensure the transition into retirement is as seamless as possible." That PLAN had better deliver a bucket of money or it won't be seamless ... more like "seem less"! I recommend the "RETIREMENT MADE SIMPLE" by Noel Whittaker to give you some inspiration.....but you have to provide all the perspiration yourself as it is a "self help" book.

Russell Napper
February 06, 2021

We have a substantial SMSF.
I've work hard for many years to accumulate for our retirement, often making sacrifices to put money into super. And payed my share of tax along the way.
I've told my family when they are winding up my estate, they'll say "the old bastard spent it"!!
If I cash in my chips early, they'll get a token few hundred thousand, the rest will go to my favorite charity!

February 06, 2021

The controversy of accumulating retirement savings not for retirement alone but inheritance of kids and grand-kids bristles with asymmetries galore:
Inadequate savings expose the taxpayer to age pension and other liabilities in our welfare state, but excess savings relative to own retirement do not expose the saver to commensurate cost.
The taxpayer is required to fund the income needs of seniors with low balances, but their wealth goes to offspring who outsources parental upkeep to the taxpayer.
Tax subsidies (during accumulation & withdrawal of retirement savings) can arguably support retirement limited by life expectancy and worsened by longevity and geriatric morbidity, but financing grand-kids' education is unfundable.
Parents have responsibility for the upkeep of children but in reverse children have no obligation to finance parental needs in twilight time (e.g., in Singapore).
The horror stories in the US and Europe of governments running insolvent defined benefit pension plans that mortgage the earnings of the unborn should alert policy-makers to cut the coat according to the cloth. This has not occurred. In the event, successive governments' only hope is that the inevitable implosion happens when they are out.
Is this prudent?

February 03, 2021

The coalition want self funded retirees to draw their super down at a higher rate. The stupidity in that is there is less buffer if a life event occurs such as an accident, an ongoing injury, sickness or disease etc of one of the couple (or both). I know one retiree who had to spend several $100K on their spouse's care in this regard !!

SMSF Trustee
February 04, 2021

No john, it's not stupid. Saving for retirement isn't about accumulating a pool of capital purely to live off the income it then generates. Some if not all of that capital is meant to be there to use. It was income during your working years that you don't spend then so you can spend it later. It's the same as all forms of saving. You don't save to buy your wife rubies for your 40th wedding anniversary but expect not to have to use any of the capital you put aside, do you?

Yes, there's an issue with timing as you don't know when you're going to die so you don't want to run all your capital down too quickly. But a bigger problem, at least for those with reasonable amounts of retirement savings, is that they are planning on leaving most of it to their kids. THAT'S what's stupid and inappropriate.

Part of the human race
February 04, 2021

The answer to that dilemma is to impose a tax on the capital left at death. It is not appropriate to create another generation of rent seekers

SMSF Trustee
February 04, 2021

"Part of the human race". Nah, that wouldn't be right. Tax has already been paid on the income that was saved to accumulate the capital. Besides, there IS already tax levied. If the beneficiaries retain the capital they inherit they pay tax on the income; if they sell it, there's capital gains tax.
Let's rid ourselves of this mythical notion that inheritance is tax free.

February 05, 2021

Why is leaving money to your kids "stupid and inappropriate" ? I think not doing so is. It's called "intergenerational wealth", and if you didn't have it, the Carnegies, the Mellons, the Vanderbilts etc. (not to mention Europe's aristocracies) wouldn't exist if they'd SKI'd it all away.

Sure, if your kids are absolute drop kicks, leave them nothing (but then, the former is probably your own fault), don't make them depend on an inheritance, but also, don't leave them nothing if they or your Grandkids (did you forget them ?) could benefit from a bit of a cash splash.

SMSF Trustee
February 07, 2021

Chris, leaving an inheritance isn't stupid, but that isn't actually what this discussion is about. Read it carefully and the conversation is about the opposite. It's about how it isn't stupid of the government to expect you to use some of your capital to help fund your retirement, it's actually perfectly reasonable. The tax advantages that helped you to accumulate super in the first place were not given to help you create intergenerational wealth, but to help you fund your retirement. If you want to build a pool of capital to leave to your kids then please pay tax on it and grow it outside the super system.

Jeff Oughton
February 05, 2021

What's stupid is that over 80% of Aussies die with 80% of their wealth that they had accrued on the 1st day of their retirement! It's a personal choice - but i hope they do not just eat baked beans and watch tv in the dark!
Over savings by elderly Australians means more for beneficiaries after death bequested with a cold hand.
Why not give before death - with a warm hand?
Why not buy heath insurance to cover the health risk?
Why not get financial advice around the longevity risk of over saving.....for aged care ....and the latter part of your life?
And if not to manage your own longevity risk, why not take take a look at your wealth, cashflows, health and your years left etc and do a simple forecast for the next year.. Most Australians will see they are underspending year by year - in fear of the unknowns when they do not need to be!

Robert Stubbs
February 07, 2021

Jeff, I'm interested in your comment: "What's stupid is that over 80% of Aussies die with 80% of their wealth that they had accrued on the 1st day of their retirement!".
Could you provide where you gleaned these facts?. Thanks.

Jeff Oughton
February 03, 2021

Here here...

During "retirement" or the latter stages of their life - like "pre retirement" - there are significant benefits from planning for opportunities and risks ....unknowns. Otherwise, human emotions and unexpected events can adversely impact your well being - especially those humans without plans & bonds with others.

It's certainly complicated involving not just financial well being - rather a portfolio of 5 key activities - 1.Health & Self Development- physical & mental; 2.Work - both paid & unpaid/volunteering; 3.Family & Friends - Relationships ; 4.Hobbies & Social Activities; and 5. Finances - Balance sheet & Cashflows.

But as the Retirement Income Review has shown - with a million dollar financial promise from the government and future generations involving the support from the aged pension, govt health insurance, aged care, transport concessions etc etc etc - most elderly Australians with a home too - are very well placed to plan a happy old age - especially if they are shown how to unlock the private savings in their homes to boost their incomes and financial wellbeing....and overall wellbeing.

Indeed, as many surveys of financial well being show - "retirees" feel the most comfortable of any life stage - except for those elderly renting. And amongst those pre-retirement, those owning a home or with a mortgage have much higher financial comfort than renters. Buying a home and unlocking the savings later in life is a key to a better life - both pre and post retirement. Staying healthy, staying connected with family and friends, working for income or volunteering are all important too.

February 03, 2021

Hindsight shows that retirement is the great unknown and unknowable. All the best laid plans of mice and men can dissipate in an instant. Yet it is the want of humans to know well in advance what will happen. We look for certainty where it doesn't exist. We seek very early warnings so we can prepare for what is coming. Then Nature steps in without warning to erode our savings, increase our costs and/or undermine our health. Result? We get what we are unprepared for and carry the consequences. Fortunately, we often get a chance to adjust for the new knowns and attempt to make our near-term life better, but then, the future becomes a new set of unknowns and sometimes unknowables

February 05, 2021

This is so true. We even visit fortune tellers and hope for answers. We cannot know what we cannot know. Like you said..the best laid plans.... I plan to spend my retirement savings and maybe leave whatever home I happen to have at my demise to my children/grandchildren. I feel that should be sufficient. I don't agree with leaving large sums in super to future generations - that's not what it's for.

Rod Apel
February 03, 2021

Post retirement issues. coping with sequencing &a plan to manage sale in growth stocks to supplement dividends.


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