Inflation hits spending patterns of retirees

challenger retirement

24 March 2023
| By Laura Dew |
expand image

Some 80% of retirees say they are already negatively feeling the impact of inflation and the majority are concerned it will mean they run out of money, according to Challenger. 

At an adviser roadshow in Sydney, Andrew Lowe, head of technical services at Challenger, said the impact of inflation, which had risen around 7%, was negatively affecting retirees. 

The shape of lifetime income streams looked extremely different to how they did 24 months ago, he said.

In a survey of around 5,000 retirees, some 80% said they were already concerned about inflation’s impact and 90% said they were concerned what impact it would have on their finances over the next 12 months. 

Only 5% of respondents to the Challenger survey said they were unconcerned by inflation and Lowe speculated these people were likely on a defined benefit scheme or receiving the highest rate of Age Pension. 

The top concerns of retirees were the impact of CPI inflation, the cost of living crisis and capital preservation.

After concerns about the impact on essential spending such as groceries and energy, retirees were concerned about the cost of holidays as people looked to travel again after the restrictions during the COVID-19 pandemic. 

This was feeding into fears about running out of money, an issue exacerbated by the fact that people tended to underestimate how long they would live. 

“Australians get their life expectancy very wrong, they tend to underestimate by five years so this is problematic if they are already concerned about running out of money," Lowe said.

“Around two-thirds of retirees said they were concerned about running out of money and, of those two-thirds, 80% said they were ‘somewhat’ or ‘extremely’ concerned.

“People expect to reduce their spending as they get older and they do reduce their discretionary spending such as travel but they find they have to spend on other areas such as health which becomes more dominant in their spending.”

Read more about:


Add new comment

The content of this field is kept private and will not be shown publicly.

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry



Planners will be in short supply, with only 376 in FY23–24. In my experience, of this number, only around 20% to 30% wi...

16 hours ago
Peter James

As usual there is no delineation in the article between risk specialist advisers and investment specialist advisers. Thi...

17 hours 16 minutes ago
Mark Harris

Is he serious, improvements from legislation change, all I see is more ASIC compliance and higher costs, this government...

18 hours ago

Insignia Financial has unveiled a new operating model and executive team, including a new head of advice, while three senior executives are set to depart the licensee....

1 week 5 days ago

The $280 billion Australian Retirement Trust is the first superannuation fund off the block to report its performance for the 2023-24 financial year....

3 weeks 1 day ago

Analysis by Chant West of the annual performance of growth superannuation funds has uncovered which ones see the best performance....

5 days 12 hours ago


Fund name
Ardea Diversified Bond F
144.00 3 y p.a(%)
Hills International
63.39 3 y p.a(%)