A Super Members Council (SMC) report analysing recent data on retiree behaviour patterns has dispelled the myth retirees are not spending enough of their superannuation benefits to fund their lifestyle.
To this end, the study found superannuation withdrawals are now typically higher than the minimum amounts required.
The exercise reviewed 2024/25 data on retiree spending behaviour and found 68 per cent of participants drew down more than the minimum amount required, with the number in this cohort rising to 81 per cent where retirees had super balances of less than $50,000.
“Retirees are not underspending their super. It’s time we retire that myth and focus on making retirement simpler, easier and more intuitive for everyday Australians,” SMC chief executive Misha Schubert noted.
Further, the analysis revealed the level of withdrawals varies with age, with retirees 65 to 69 years old having the highest drawdown rates across both working life and retirement super accounts. Drawdown rates then dropped for retirees in their seventies, before rising again in their eighties as expenditure on aged care and health rose.
According to the industry body, the myth about underspending is drawing attention away from the real issue of complexity in the superannuation system, which can cause “decision paralysis” for many retirees.
It suggests a retiree could miss out on as much as $136,000 over the course of their retirement, indicating a large part of this is due to many retirees keeping their super in an accumulation-phase account where earnings are taxed instead of moving it into a retirement account where earnings can be tax-free.
The SMC predicted this will become even more of an issue in future years as the number of Australians aged 85 and over is forecast to rise from a current level of 580,000 to 1.9 million by 2065/66.
“The race is on to get ahead of the coming silver tsunami of retirees. A simpler, smarter pathway to retirement will help more Australians retire with confidence and the certainty they can pay for things they need,” Schubert said.
In pursuit of a solution to this predicament, the council is proposing reforms that include automatically making retirement savings accounts tax-free from age 65 for eligible members and a review and adjustment of minimum drawdown requirements for retirees with low account balances.
