If it feels like everything costs more these days, you’re not imagining it. From groceries and power bills to healthcare and insurance, the rising cost of living has been front of mind for many Australians, and retirement is no exception.
In fact, research shows that several key retirement-related costs have risen sharply in real terms in the past few years. Spending on private health insurance has increased by 47.5%, while other insurance, such as home and vehicle cover, rose by 55.9%.1 Health-related costs have also edged higher, with fees paid to health practitioners rising by 17.1% and everyday household energy costs have added further pressure, with spending on electricity, gas and other heating fuels increasing by 11.6%.2
Then there’s the fact that other costs can rise or pop up unexpectedly as we age, which can make retirement feel harder to plan for. Things like healthcare, home maintenance, helping out adult children or grandchildren can catch people unaware. Add inflation into the mix, and it’s easy to understand why many members worry about whether they’re really on track.
That uncertainty can lead many to stick to the minimum drawdown rates once they retire and access their super. It’s common to assume these are a guide for how much you should be spending each year. In reality, they’re just a regulatory minimum. They don’t reflect your lifestyle, your priorities or what you actually want your retirement to look like. While minimum drawdowns might be right for some, it can mean being overly cautious in the early years of retirement, the very years when health, energy and opportunities are often at their peak. There’s no single “correct” approach, but relying on minimums alone can lead to decisions that don’t quite match real life.
Staying in control of retirement costs doesn’t mean you have to miss out on the things that matter most to you. By having a thoughtful plan in place, and taking the time to check in on your progress regularly, you can make informed decisions as your needs and priorities shift over time. Adjusting your plan when needed ensures it always reflects what’s important to you, not just now but into the future.
With the right level of visibility and support, the reality of rising costs doesn’t have to derail your retirement. Instead, these changes simply become another element to factor into your planning, rather than something that throws you off course. This approach puts you in the driver’s seat, helping you stay on track to enjoy the retirement you’ve worked for.
When thinking about or planning your retirement, it’s important to set an income drawdown rate that meets your needs and goals, not just the government minimum. Your ideal rate may be higher, and relying only on the minimum could mean living more conservatively than you need to, especially in the early years of retirement.