Avoiding FORO: The fear of running out

Retirement is often considered the reward at the end of your working life. Despite this, many Aussie retirees are living frugally in fear their money won’t go the distance. If this is you, it’s not difficult to see why. Knowing how much you’ll need for everyday essentials and unexpected costs in the future, is no easy task – especially considering the soaring cost of living. While this might have serious economic implications, underspending risks compromising your quality of life in your later years.

Key learnings covered in this topic

  1. Rules around withdrawing your super
  2. How not to run out of super in retirement
  3. Financial advice available to you


Findings from a survey by National Seniors and Challenger attributed this fear more specifically to a range of factors, including worrying that the Age Pension won’t exist in the future, aged care costs and medical expenses, and a lifetime of societal expectations to save as much as you can.1

Could your FORO be misplaced? Are you one of the “sensible squirrels” who is unnecessarily underspending – saving your money for a rainy day, or planning to pass on your wealth - and forgoing what could be a more comfortable retirement?

Here’s 6 tips that may help alleviate the FORO:

1. Understand the rules around super withdrawals

Many retirees are drawing the minimum from their super balance each year – believing that because it’s the minimum, it’s the amount they should withdraw. However, your financial situation is unique, so too are your retirement income requirements.

What you need may change from year-to-year too. The good news is that your pension account is flexible – you can decide how much and how frequently you receive your payments, all from MemberOnline.

Find out more information about your pension payments and minimum drawdown limits at Manage your pension.

2. Check your investment strategy is right for your circumstances

Your investment strategy should consider your:

  • Retirement goals: what you want to achieve with your super and how long you might need it to last
  • Risk tolerance: how much risk you are comfortable with , and
  • Have appropriate diversification: so your balance withstands various market cycles.

The right investment strategy for your needs may change when you’re earlier in your retirement versus later in your retirement, so it’s a good idea to revisit this once in a while.

3. Layer your income

Your total retirement income could come from a few different sources – otherwise called a ‘layered income’. Income layering can engender a greater sense of control, predictability and security around what the future holds.

Sounds great, but don’t have access to investments or savings outside of super? You could consider combining your CareSuper Pension with our Guaranteed Income product. The Guaranteed Income product provides more certainty around some of your income for life’s essentials, leaving your flexible income through the CareSuper pension for other spending. You’ll need to speak to a CareSuper financial planner before opening a Guaranteed Income account.

4. Ensure you’re aware of your entitlement to the Age Pension and other benefits

Are you eligible for, or getting the most your situation allows, from the Age Pension?

Eligibility for the government Age Pension depends on your age, residency status and the income and assets tests. How much you receive is subject to the income you obtain from other sources (including your super) and the value of your assets.

Even if you don’t qualify for the Age Pension, you may still be eligible for other types of income support, including a Commonwealth Seniors Health Card, Low Income Health Care Card and/or Pensioner Concession Card. For more information, see our latest article on the benefits you could be eligible for or visit www.servicesaustralia.gov.au.

5. Create a budget for your retirement

Many retirees struggle with the shift in mindset: from saving for retirement, to spending in retirement. MoneySmart’s budget planner is a useful tool to help you understand where your money is going and how much you actually might be able to afford to spend. Once you have a clear financial picture, you’ll be able to see how you might be able to shift from existing to living.

6. Seek financial advice through your super

Managing your income in retirement can be complex, especially in the current environment. You may benefit from seeking financial advice through your super to help you better understand your retirement income needs, your future goals, and ensure your super’s invested according to your circumstances.* For more comprehensive advice about your retirement income, you can book in to see one of our experienced financial planners for a competitive fee.^ The first call is obligation free and your planner can guide you on how they can help you plan for your future. Book a call-back.

Watch CareSuper Financial Advice Manager Dan Bridgland talk about the fear of running out and how financial planning and help you plan for your future.

1 www.bdhsterling.com/retirees-dont-overlook-the-surprising-risk-of-underspending-in-retirement
*Financial advice obtained over the phone, or through MemberOnline, is provided by Mercer Financial Advice (Australia) Pty Ltd (MFAAPL) ABN 76 153 168 293, Australian Financial Services Licence #411766.
^Advice is provided by one of our financial planners who are Authorised Representatives of Industry Funds Services Limited (IFS). IFS is responsible for any advice given to you by its Authorised Representatives. Industry Fund Services Limited ABN 54 007 016 195 AFSL 232514.

Information correct as at 14 November 2023.