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Spending in retirement

There are lots of uncertainties when it comes to retirement.  While most Australians are working longer, we’re also living longer, so our retirement is longer. In fact, for some of us, retirement can span a period of 30 or 40 years.

A lot can happen in 40 years and it can be difficult to know how much we can afford to spend.  How do we balance spending today, and still be responsible for the future? 

Old age is expensive

A recent study by research firm MYMAVINS found that retirees worry about having enough money to last through retirement.  One in four retirees expects their expenditure to increase in late retirement, and seven in ten retirees are concerned they won’t have enough to meet health care costs. They also worry about possible aged care and home care costs.

These are reasonable concerns.  Growing old can be expensive and there is no doubt that when you have financial resources in old age, you have more options, and you can receive better care. 

Confidence to spend

That’s why most retirees are cautious with their day-to-day spending.  

But worrying about day-to-day spending is bad for our mental, emotional, and broader well-being.  When we suffer from financial stress, we drink more, sleep less and have more conflict in our personal relationships.

If we have confidence in how much we’re spending, we feel more financially resilient, suffer less financial stress, experienced more positive emotions and are happier overall.  

The $64,000 question 

So, how much can retirees afford to spend in the early years of retirement?

According to the super funds, retiree couples need to spend around $64,000 a year for a comfortable retirement. But that is too simplistic.  In reality, there is no magic number.  

What we can afford to spend depends on many factors including: where we live; our ability to return to work; our commitments; our health; our investment returns; the types of investments we own; as well as how much money we have.

But the main determinant of how much you can afford to spend today is our mindset.  Are we flexible and willing to make changes if our circumstances change?

A framework for spending confidence

Flexibility is the key to spending confidence.  When we are flexible, if things go off track, we can reduce expenditure, and when things are going well, we can spend more. 

At When Financial Solutions, we can help you understand the difference between your discretionary wants and your basic financial needs.   We also apply a framework designed to shield you from the ups and downs of investment markets. By compartmentalizing your expenditure for the next two or three years, you can have money available irrespective of market conditions.

And that’s how we give you confidence to spend. It’s not a matter of ‘if’, but ‘when’.


Michael Bowman and James McMaster are co-founders of When Financial Solutions.  This article is general and does not consider your personal circumstances.  If you would like advice specific to you please give us a call.


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