Cost-of-living pressures don’t stop at retirement. If anything, they can make an already difficult transition even harder: moving from a lifetime of disciplined saving to drawing income with confidence.
That is a shift many people underestimate. For decades, the retirement system has trained Australians to accumulate – to contribute regularly, avoid unnecessary spending and build a balance that will last. Then retirement arrives, and the task changes. The goal is no longer just to preserve wealth. It’s to use it.
In my experience, the challenge is rarely just mathematical. More often, it’s behavioural and structural. Some retirees are cautious about drawing down. Others spend above the minimums because life, health, housing and family needs require it. For many people, the harder issue is not a simple lack of willingness to spend, but uncertainty about what is sustainable.
That distinction matters. Recent analysis from the Super Members Council challenges the persistent myth that most Australians are underspending their super. In 2024–25, around 68% of tax-free retirement account holders withdrew above the minimum, rising to 81% for those with balances below $50,000. The better question is therefore not whether retirees are simply spending too little or too much. It is whether they have enough confidence, guidance and flexibility to spend appropriately for their circumstances.
When complexity gets in the way of confidence
The old story was that retirees were broadly too reluctant to use their super. But the newer data suggests a more nuanced picture. Many retirees are already drawing above minimum rates, particularly those with lower balances. At the same time, others may still hold back because they fear running out of money, dislike seeing balances fall, or want to preserve funds for future health, aged care or family needs.
That can sound prudent. But it may come at a cost.
The result is not one universal behaviour, but a range of behaviours shaped by balance size, age, health, confidence, family circumstances and the rules of the retirement system. The Super Members Council found drawdown rates are highest for retirees aged 65–69, fall through the 70s, then rise again in the 80s as age-based minimums increase and health and aged care costs become more prominent.
This is not just a financial issue. It’s also a wellbeing issue.
The purpose of retirement savings is not simply to avoid hardship. It’s to support a dignified retirement – one that provides security, choice and the ability to participate in life. That is why the discussion needs to move beyond the binary question of whether retirees are underspending. The real issue is whether people can make informed decisions about income, tax, longevity risk and changing needs over time.
A colleague’s work on financial wellbeing makes a similar point: real financial wellbeing is not just about meeting obligations and feeling secure about the future. It’s also about having the freedom to make choices that allow you to enjoy life. That broader lens matters in retirement. Money is not there to sit untouched. It’s there to support a life worth living.
The hardest part is navigating the transition
Moving from saving to spending is a major shift, but it is not the only challenge. The retirement phase asks people to make decisions about income streams, tax settings, Age Pension interaction, investment risk, minimum drawdowns and future care needs – often at the same time they are adjusting to a new stage of life.
The habits that make people good accumulators – restraint, delayed gratification, watching balances rise over time – are exactly the ones retirement later asks them to loosen. Many retirees experience drawdown as a loss, even when spending was the whole point of saving in the first place. Seeing a balance fall can feel like failure, not progress.
That helps explain why complexity can be costly. The Super Members Council estimates a typical new retiree with super could miss out on as much as $136,000 over retirement – around $6,500 a year – because the system is difficult to navigate. In that context, the problem is not simply spending too little. It is decision paralysis, confusion and a lack of confidence at the point where good choices matter most.
The goal is not to encourage reckless spending or to assume all retirees should draw more. It is to help people become purposeful spenders: using savings in a way that is sustainable, personally meaningful and responsive to changing circumstances.
That means recognising that retirement may last more than 20 years. It still requires planning, resilience and a sensible balance between current income, future security and long-term growth. But it also requires a system and an advice experience that give people confidence to use their savings for the purpose they were built for.
The data points to a bigger system challenge
This matters because Australia is entering a much larger retirement phase. The Population Statement cited by the Super Members Council forecasts the number of Australians aged 85 and over will rise from about 580,000 today to 1.9 million by 2065–66. Over the next decade, around 2.8 million Australians are expected to move towards retirement, with the number retiring each year expected to double from about 150,000 to 300,000.
The scale of money involved is also changing. The amount of super held by Australians reaching age 65 is projected to almost double – from around $750 billion over the past decade to almost $1.5 trillion over the next. More people will be retiring with more super, but not necessarily with more clarity about how to turn that balance into sustainable income.
There are also practical tax and product decisions that can make a meaningful difference. Around 700,000 Australians over 65 who are not working full-time are estimated to be keeping their super in a taxed savings-phase account, paying on average $650 more in tax each year than if they moved to a tax-free retirement account within super. For some, there may be good reasons for that choice. For others, it may simply reflect uncertainty about what to do next.
Confidence to spend comes from structure
This is why confidence in retirement rarely comes from guesswork. It comes from structure – and structure is what helps turn savings into purposeful spending.
A clear income strategy can help retirees separate day-to-day spending from longer-term growth, reducing the temptation to react to every market movement or default to inaction. When essential spending is covered, future needs are planned for and trade-offs are understood, people are often far more comfortable drawing an income that fits their life rather than simply following a minimum or maximum rule of thumb.
Advice can turn capacity into confidence
This is where advice can make a real difference. Good advice is not just about forecasting returns or modelling balances. It’s about helping people understand what they can afford, what trade-offs matter, and how to spend with confidence while adjusting over time.
That confidence matters because the retirement challenge is becoming larger, more complex and more personal. The data suggests many retirees are already drawing above minimums, but it also shows that complexity can leave people worse off. Advice can help turn a super balance into a plan: what income is needed, what can be safely spent, what should be preserved, and how decisions should adjust as life changes.
Retirement is for living, not just navigating rules
Cost-of-living pressures are real, and prudence will always matter. But retirement planning is not only about preserving capital or meeting a minimum drawdown requirement. It’s about using money with purpose, in a way that supports both today’s needs and tomorrow’s uncertainty.
If the foundations are sound, retirement should not be defined only by what remains in the account balance. It should also be judged by whether money is supporting the things that matter: security, independence, connection, participation and enjoyment.
That requires a mindset shift, but also a system shift – from treating retirement as a maze of technical decisions to making it simpler, more intuitive and better supported.
And the bottom line is simple: the hidden risk in retirement is not captured by a single myth about spending too little or too much. The real risk is that people reach retirement with savings, but without the confidence, guidance and structure to use those savings well.
Matt Werakso is Head of Professional Wealth Management at UniSuper, a sponsor of Firstlinks. He has over two decades of experience in financial services across Australia and the United States and is passionate about improving member outcomes through high-quality advice and expertise.
This is an opinion piece and the opinions expressed are not intended to act as financial or other advice. The information is of a general nature and doesn’t consider your personal circumstances. Before making decisions, you should consider whether the information is appropriate for your circumstances otherwise seek financial advice.
UniSuper Advice is operated by UniSuper Management Pty Ltd ABN 91 006 961 799 (USM), which is licensed to provide financial product advice. USM is also the administrator of the fund UniSuper ABN 91 385 943 850 (UniSuper). UniSuper Limited ABN 54 006 027 121 is the trustee of UniSuper.