Your retirement could last decades, but are your finances ready for the long haul?

Does your dream of a carefree retirement clash with the daunting reality of how to make funds last for 20, 30 or even 40 years?

Do you wake up in the night worrying about your retirement? You’re not alone. Three in 10 Australians are concerned they won’t have enough money to live comfortably in retirement, and with lifespans increasing, many may face the reality of outliving their savings.

And this isn’t just a hypothetical fear. Research from the 2025 Retirement Happiness Index by Challenger in partnership with YouGov reveals that financial security is a major consideration for Australians aged 60 and over, with significant concerns around running out of money. In fact, a 2024 National Seniors research survey highlighted that almost 90 per cent of people believe they need more than the Age Pension to maintain a basic lifestyle.

Retirement today is different from previous generations

The good news is a longer, healthier life means more time to enjoy the fruits of your labour, but it also requires a more solid financial strategy. The transition from earning a steady pay cheque to living on savings can be difficult, making budgeting with confidence a significant hurdle.

Challenger Chief Executive, Customer division, Mandy Mannix said confidence is key to a rewarding retirement. 

“When people feel uncertain about their finances, they tend to hold back. That’s led to a chronic underspending problem in retirement, with many Australians living more cautiously than they need to,” she said. 

This “underspending problem” means many retirees are missing out on enjoying their best life, holding back on travel, hobbies or even simple pleasures like coffee with friends, due to a pervasive fear of outliving their savings.

The security of a regular income

So, how can Australians navigate this evolving landscape and achieve genuine financial peace of mind?

One solution gaining traction is an annuity. A lifetime annuity is purchased with a lump sum that pays a monthly income for life, which in turn provides peace of mind.

“You are buying a guaranteed regular income that you’re going to get every month for the rest of your life,” Ms Mannix said.

This financial security can feed into other areas of a retiree’s life.

“If you don’t have to worry about money coming in every month to cover your essentials, you can enjoy or pursue those things that lead to a greater happiness,” she said.

Challenger Head of Retirement Income Research Aaron Minney said most retirees don’t want to think about money, they want to focus on a lifestyle they can enjoy.

“The problem with super in retirement is that people are forced to think about what they can draw down. This is where an annuity is helpful. The income payments are known and you can have them increase automatically with the cost of living,” Mr Minney said. 

The joy of peace of mind

Leo Zwart is 73 and lives in Mount Cotton, south-east of Brisbane. As a retiree who is still working one day a week, he values staying active and connected. According to the 2025 Retirement Happiness Index, the top four key drivers to retirement happiness were identified as activities and hobbies, mental health, having a purpose, and social connections.

Mr Zwart, a social grandfather of nine with a love of golf believes staying connected is key to happiness in retirement. “You’ve got to go out and communicate with other people,” he said. Mr Zwart and his late wife set up an annuity so they could take the worry out of their future and feel more secure. “It’s income for the rest of your life. The extra money pays for my rates and health insurance,” he explained.

Mr Zwart said the financial arrangement has positively impacted his happiness because his pension and work “isn't always enough”.

“I know that money is coming in every month, and I don’t have to worry about it. It’s a great feeling.”

Building your resilient retirement plan

Retirement should be a time of reward and enjoyment, not anxiety. Proactive financial planning in an era of increased longevity is essential. It involves understanding your income needs, exploring options that provide certainty and ensuring your funds can keep pace with the cost of living.

For those seeking practical insights into building a resilient retirement income plan, resources like Challenger’s A Guide to Income in Retirement can be invaluable. It offers expert perspectives and clear guidance to help navigate this crucial life stage, allowing you to embrace your best life knowing your finances are ready for the long haul.

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