Your retirement savings are there to be spent. Don’t be afraid to

For years, or maybe even decades, today’s retirees have been doing the right thing. They’ve saved. Budgeted. Knocked off the mortgage. Built their superannuation balances quietly and consistently, through market ups and downs, job changes, family chaos, and rising costs of living.

They’ve done without at times, put others first, and followed the advice to squirrel away as much as they could for the day they finally stopped working.

You’ve been the squirrel. You’ve done the work. Now it’s time to start using it.Credit: Simon Letch

But now that retirement is here, or just around the corner, there’s a new kind of challenge. One that we don’t discuss much, and one that spreadsheets can’t really solve. Because while many retirees have a decent stash of savings, they’re not sure how, or if, they should start using it.

They’ve spent decades being sensible, stretching every dollar, putting off indulgence, and quietly building security. Now they’re sitting on their pile of financial nuts … and feeling strangely frozen.

They’re not sure if they’re allowed to spend it. They worry about being frivolous. They hesitate to take that big trip, or even upgrade the car. They track expenses to the cent, even when they don’t need to any more.

It’s not a problem everyone has, of course. But more retirees than you’d think are struggling with the same question: “I’ve done the hard part. Am I actually allowed to enjoy it?”

How do you start spending what you’ve saved?

It’s not as easy as it sounds. Many retirees are finding it incredibly difficult to switch gears, from saving, protecting and growing their money – to actually using it. Even when they’ve run the numbers, even when they’re told they’re “financially secure”, even when the money is sitting right there in their super fund or bank account, ready to be drawn down.

They’ve been squirrels for so long, carefully gathering and guarding every financial nut, that the idea of cracking into the pile feels unsafe. Maybe even irresponsible. A little bit scary. And, for some, quietly guilt-inducing.

But here’s the thing: this is exactly what the money was for. Not to be hoarded. Not to be passed on untouched. It was saved to be used – to support a life. To create flexibility. To fund freedom and fulfilment in the years after full-time work.

And yet, the data tells us many Australians aren’t doing that.

Recognise that being careful has served you well, but it doesn’t have to define your retirement.

The Retirement Income Review in 2020 found that most retirees live off the income their assets generate, drawing down on very little of the capital itself.

A 2022 Financial Services Council report showed similar patterns: retirees tend to underspend relative to what they could afford, even when they have more than enough to last their lifetime. Some even die with more in super than they had when they retired.

What’s going on here?

Part of it is pure habit. You don’t spend 30 or 40 years being careful with money only to wake up one day and become a carefree spender. That mindset doesn’t just switch off because you’ve hit retirement age.

But there’s also a deeper fear running underneath: the fear of running out. The “what if” scenarios take over: what if I live to 95? What if I need aged care? What if there’s another market crash? What if my kids need help? What if my partner gets sick?

Those are all fair questions. Retirement is longer than ever, and health and aged care costs are real concerns. But for many people, the bigger issue is that fear takes over the facts. It’s not that they can’t afford to spend, it’s that they don’t feel safe doing so.

And on top of fear, there’s guilt. Retirees today are from a generation that worked hard, often sacrificed and prioritised others. For many, spending on themselves, especially on things that feel indulgent such as travel, hobbies or “fun money” triggers extraordinary feelings of discomfort. Even when they have permission. Even when they’ve earnt it.

So what happens?

They keep living cautiously. Watching the balance in their super. Hesitating over every upgrade. Delaying the big trips until “next year”. Holding off just in case. And then the window starts to close.

Because the real risk in retirement isn’t just running out of money, it’s running out of time. Running out of health. Running out of energy or opportunity to do the things that money was meant to unlock in the first place.

We often tell people to plan for a retirement that could last 25 or 30 years, which is true. But the years when you can hike, travel, explore or take on big new adventures are front-loaded. The first 10 or 15 years matter most. If you wait too long, you might still have the money but not the same ability to enjoy it.

So what’s the answer?

It’s not reckless spending. It’s not a luxury cruise every six months (unless you’re into that). It’s intentional spending, with the same kind of planning, values and thoughtfulness that got people here in the first place.

For some, that starts with creating an experiences budget and setting aside a modest amount each year just for the things that make life feel rich. A dedicated travel fund. A hobby or pursuit allowance. Grandkid adventures. Better seats at the theatre. Better seats on the plane.

For others, it’s about creating certainty so they feel free to spend. That might mean putting two years’ worth of living expenses in a low-risk account, and letting the rest of their investments keep working in the background.

Or buying a lifetime income stream that can guarantee their core cost of living will always be covered, no matter how long they live. That simple buffer can create the confidence people need to relax and enjoy what they’ve saved.

And for almost everyone, it’s about permission. Recognising that being careful has served you well, but it doesn’t have to define your retirement. You’ve been the squirrel. You’ve done the work. You’ve got the pile.

Now it’s time to start using it. Not all at once. Not recklessly. But with purpose, joy and confidence that this time of your life is what the money was for.

Bec Wilson is author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.

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