Retirement offers a golden opportunity to embark on the adventures you’ve always dreamed of. For many, there’s a bucket-list destination you’ve been saving for—a safari in Africa, the castles of Europe, or the tranquillity of tropical islands. Yet, as we step into retirement, the fear of running out of money often takes hold. After all, no one has a crystal ball into the future. As a result, many retirees press pause on those bucket list travel plans.
Decades of frugal habits and the fear of outliving your savings can cast a long shadow over what should be a time of freedom. But what if there were a way to secure your financial future while also giving yourself permission to fully enjoy the present?
In our younger years, we are mindful of borrowing money for a holiday. We toil away at work, saving up to splurge on an overseas trip. But even in retirement, this cautious mindset continues. A 2024 National Seniors and Challenger survey found one in six retirees would put an additional $100 a week towards a holiday. Old habits might die hard, but they don’t have to limit your lifestyle.
The key is shifting your perspective. Managing retirement savings isn’t about hoarding your money – it’s about making it work for you. The accumulated savings of retirees provides the capital that others must borrow from the bank. One way to get the most out of retirement is to figure out how to borrow from yourself.
The key to borrowing from yourself is to think about two different versions of yourself and make sure neither get short-changed. Imagine your 68-year-old self who is active, curious, and ready to travel; and your 88-year-old self who craves comfort, security, and social connection. The challenge is to meet both their needs without sacrificing one for the other.
As a 68-year-old, you’ll get the most enjoyment and have the physical ability to travel to those exotic places you’ve been dreaming about. By 88, travel usually becomes harder and so does the enjoyment.
Too often, retirees resolve this tension by underspending now, fearing they’ll run out of money later. Yet, Australia has a world-class super savings system worth over $4 trillion. The trick is turning these lifelong savings into a safe, stable income for life.
A lifetime annuity might be the solution to ensure your 88-year-old future self always has the income they need. A lifetime annuity turns your savings into guaranteed, regular income payments for life. Securing this income should only take a portion of your savings – 20 to 30 percent – providing a clear budget for that trip (or two) of a lifetime.
The moment retirement rolled around for Melbourne-based retiree, Stephen Murphy, he was celebrating his birthday in a hot air balloon over a Moroccan sunset. At age 67, Stephen stepped away from his illustrious career in IT project management, realising he wanted to enjoy his golden years chasing his passions while his health and wealth allowed. Those passions include world-travel, adventure sports like hiking, and a relaxing round of golf.
However, to overcome his fear of running out of money in retirement, Stephen recognised he needed a plan. About 12-months before stepping into retirement, Stephen began researching how to make his money last, for life. After doing a lot of his own research, Stephen realised the retirement space is complicated, and to maximise his finances and lifestyle, he would need specialist advice and help, especially when considering Centrelink rules for the Age Pension.
Speaking to his adviser, Stephen wanted a guaranteed “monthly paycheck” that enabled a “set and forget” mentality and gave him the confidence his money would last his lifetime, cover any emergencies, and provide the flexibility to pursue his dream lifestyle in early retirement.
To achieve his retirement goals, Stephen invested a portion of his retirement savings into annuities to give him a stable, reliable income that was guaranteed to take care of his needs for life. Today, Stephen holds three annuity products with Challenger – giving him the breadth and flexibility to “mix and match” and achieve all of his goals, while ensuring death benefit protections for his loved ones. Yet, Stephen recognised annuities are not an “all or nothing” proposition and also holds other investments, like cash and super, preferring to be defensive amongst rising global volatility.
A passionate traveller, Stephen kicked off retirement exploring Japan, Morocco, and India. Over the next few years, Stephen has Europe and the US in his sights – realising his dream of visiting Graceland as a lifelong Elvis fan.
Retirement is a time to reap the benefits of a lifetime of hard-work – take that dream vacation, enjoy that extra piece of cake, and spend precious time with the grandkids. By borrowing from your future self, knowing your priorities and pace of life will change and that you have already locked in a regular income, you can spend more now and have the confidence to enjoy that trip of a lifetime.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.
