Experts explain: Why are so many retirees afraid to spend their own savings? 7



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New research has revealed that some Australians are dying richer than when they retired, because they are only withdrawing minimum superannuation amounts.

Economist Dr Andrew Reeson says his research shows older Australians are financially conservative, and could be encouraged to spend more throughout their lifetime.

“This is money that people have earned and saved, and one would hope that they can enjoy it, rather than having a situation where they die without actually spending it”, he said.

Retirees are legally required to withdraw from their superannuation accounts each year, to qualify for certain tax exemptions.

Withdrawals work on a sliding scale, with retirees aged 65 to 74 years required to take 5% from their superannuation accounts each year. This requirement rises to 14% for people aged 95 and older.

Dr Reeson believes retirees are only withdrawing minimum amounts, because making decisions about how to better spend their money over time is quite confronting.

“People are very risk averse and spend at a relatively slow rate, which potentially means that many people will die still with significant superannuation balances”.

Dr Reeson has asked for legislators to consider, “providing more support for people as they approach retirement – into thinking about what they’ll need and how they’ll use their pensions and what other investments they can make”.

Are you planning to live it up, and spend everything in your superannuation account? Or are you concerned about budgeting throughout your whole retirement?

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  1. The problem is that we literally don’t know how many years we will need this income, so we are conservative in it’s use because once it’s gone there is no way to replace it

    3 REPLY
    • So true Janice, and if end up needing to go to a retirement village or nursing home you worrying will you have enough money to do so. ..

    • Absolutely right! And what if you have increased expenses such as repairs done to your home/car or you get ill? Or God forbid, one of your children have a disaster. This Prof obviously has more money than I do!

  2. People have been saving all their lives for their latter years.

    They are not likely to become spendthrifts at this late stage.

  3. if a person dies ,what happen to there super,left for their kid or grandkids do the have to pay gift tax on it ,thats what you should be talking about or should they pulll it out before they cark it,just a thought ,just like Mal frazer said

  4. The main problem with superannuation is the ebb and flow of the shares to which superannuation is linked.
    So, we are left in a position of not knowing three critical things: 1. When we will take the trip from which nobody returns 2. How long our money will last, and 3. What rate of expenditure we will need to use it all before item one.
    It’s a bit of a balancing act, which is probably why people are conservative.

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