Bec Wilson answers: I’m anxious about spending my savings

1. Work out what you can afford to pay yourself each month.

Understand each of the layers of income you might be able to rely on. The Government Age Pension - if you’re eligible, your superannuation drawdown, perhaps a lifetime income stream and maybe some income from working. And map out what those layers could provide you with as a total retirement pay cheque each month.

2. Treat your retirement pay cheque as money you’re meant to spend.

Have that money paid into the account you use for everyday spending every fortnight or every month. Recreate the system you had when you were working. The money in this account is meant to be spent or used as you see fit, while the rest of your retirement savings stay invested for later. 

3. Plan separately for the big stuff. 

Your regular retirement pay cheque might cover your everyday lifestyle spending, and the trips you want to allocate for every year. But retirement is also likely to include bigger expenses - like replacing the car, renovating the kitchen, taking a big trip or helping the kids. Put these into your plan too, but consider them separately so when the time comes to spend them, you don’t feel like you’re blowing the budget.

4. Give yourself permission to spend more in the early stages of retirement.

Recognise that retirement spending doesn’t have to be consistent throughout your life. Your earliest retirement years are important - and you don’t get the opportunity to be 63 or 66 again. These are often the years when you have the health, energy and freedom to travel, try the things you’ve always dreamt of doing and enjoy wonderful adventures. Some of these things you might not want or be able to do in your eighties. So if you can afford them, don’t let yourself put them off because spending the money feels uncomfortable.  

So where do you start?

Start by working out what your retirement pay cheque could be. Then, when you know what you can afford to spend, actually pay it to yourself and practice spending it. It might feel strange at first. After all, you’ve spent decades saving money and protecting your pile. So it might take a bit of practice to get comfortable spending it too. But confidence comes from knowing your numbers - and then practicing spending what you know you can afford.