Could we be too conservative in retirement?

With the current cost of living crisis, political uncertainty and spiking fuel price stories all over the media, it’s easy to understand why so many families are worried about their finances.

So, it is easy to understand when people think about retirement risk, they usually think about running out of money. Which is an understandable fear. Longevity is increasing, markets fluctuate, and when we retire our regular source of income suddenly disappears.

Research and lived experience point to a quieter, less discussed risk, being too conservative in retirement, and never quite using the money you worked so hard to build.

Recent research by ASIC[1] shows that nearly half of Australians aged 50 to 66 worry about outliving their savings, and only around one‑third feel confident they will be financially comfortable in retirement. These concerns persist despite Australia having one of the world’s most developed superannuation systems.

Spending data analysed by Morningstar Australia[2] shows that retirement spending typically falls sharply as people move through their 60s and into their 70s. Some of this is expected due to reduced travel, and lifestyle changes. However, in many cases spending declines more than is required for long‑term sustainability. Discretionary activities are often the first to go; holidays are postponed, home improvements delayed, and experiences reduced.

What makes this more striking is that Treasury’s Retirement Income Review[3], found that many Australians withdraw only the minimum required pension amounts from their superannuation and often pass away with significant balances remaining. While aged care and health costs can be substantial later in life, this pattern suggests that earlier retirement years, often the healthiest and most active, are frequently underspent.

We are generally comfortable spending income, such as the Age Pension or minimum superannuation pension amounts, but many people find it more difficult to spend what they still think of as their ‘nest egg’, even when these assets were always intended to fund retirement.

Market volatility can entrench this behaviour. Retirees who experience a market downturn near retirement often reduce spending and never reset it upward, even after markets recover. From my experience with clients spending habits formed in the first years of retirement tend to stick with retirees well into retirement.

The irony is that being too conservative rarely feels risky. It feels sensible. It feels responsible. However, the long‑term cost can be a retirement that is narrower than it needed to be, less travel, fewer shared experiences, more “we’ll see later”, and waiting for economic conditions to improve.

None of this is an argument for reckless spending. Retirement planning is still about sustainability but it is also about recognising that money is a tool, not just a safety net.

A favourite part of my job is talking to people about their retirement goals and ultimately helping them achieve those goals. Occasionally, I will have discussions about moderating some expectations, but often, the biggest hurdle isn’t the numbers themselves, but building enough confidence, grounded in an understanding of individual circumstances, to trust the plan and live it.

Of course, the right level of spending in retirement depends on many factors, including health, family circumstances, market conditions and future care needs. However, with the confidence a solid financial plan provides, it’s ok to turn off social media and the 24-hour news cycle, forget what financial markets are doing for a while, and simply enjoy retirement.

Book a confidential consultation with a Hood Sweeney Securities* Financial Planner today.

Author: Daman Arthur (Representative of Hood Sweeney Securities AFS Licence No. 220897) is a Senior Financial Planner | Strategy & Investments.

The information in this article contains general advice and is provided by Hood Sweeney Securities Pty Ltd AFSL 220897. This article has been prepared without taking your personal objectives, financial situation, or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation, and needs. Please refer to our FSG (available at https://www.hoodsweeney.com.au...) for contact information and information about remuneration and associations with product issuers

[1] Australian Securities and Investments Commission (ASIC) / Bloomberg
https://www.bloomberg.com/news/articles/2026-04-13/half-of-australians-near-retirement-fear-running-out-of-cash

[2] Morningstar Australia
https://www.morningstar.com.au/retirement/how-retiree-spending-plummets-as-we-age

[3] Australian Treasury – Retirement Income Review
https://treasury.gov.au/review/retirement-income-review