How this couple turned $750,000 into a carefree retirement
New research shows there are four types of retiree – care-free, content, cautious and concerned. But for the happiest, mindset is more important than money
Four years into his retirement, 73-year-old former engineer Ranbir Bedi can’t believe his luck.
So much has changed for him and his wife Rani, 69, in those years, but it’s all been for the better.
“I wasn’t expecting this much – we’re carefree,” Bedi says. “We go for a walk every morning, and we go for a walk in the afternoon. We go overseas almost every year.”
The couple sold the family home in the Sydney suburb of Kingsgrove last year to move to a beachside apartment in Ramsgate closer to their daughters and three grandchildren.
The Bedis live on their superannuation and annuity nest egg of about $750,000. They feel financially secure., which is down to careful planning – Ranbir and Rani have regular meetings with their financial adviser Gerard Haskew of Leading Advice.
But they also have a positive mindset, reinforced by regular dancing, karaoke and a lifetime of giving back to the community.
The Bedis are prime examples of the “carefree” category of retiree identified in a survey by Challenger and Susan Bell Research, which conducts market research focused on older Australians. They surveyed 1011 people in April to explore how households with more than $100,000 in savings and super spend their money in retirement.
A key finding is that for households with savings of between $300,000 and $1 million, mindset is a better indicator of whether they will be happy and content in retirement than how much money they have.
“In the middle range of retirement savings, the size of your balance alone doesn’t explain how people experience retirement,” says Challenger’s head of retirement income research, Aaron Minney.
“Australian retirees with similar financial circumstances can have different outlooks and different retirement outcomes.
“This is where mindset can matter over money. Having the financial resources is one thing, but having the confidence to use them can make a very real difference to how you experience retirement.”
That focus on mindset and spending habits led the report to identify four types of retiree spending personas: carefree, content, cautious and concerned. In case you are wondering about the percentages, though, the survey allowed people to place themselves into two categories – hence the large “other” group.
Carefree retirees
This group is the biggest of those surveyed at 28 per cent. It’s also generally the wealthiest, with most households having more than $500,000 in super and savings. Like the Bedis, retirement can mean greater freedom for them.
Their priorities are travelling, socialising and spending time with grandchildren.
“We go overseas almost every year. We have seen most of the world in the past four or five years. We’ve been to Alaska, taken a European river cruise and Japan. That was all planned: we need $20,000 a year to do these things .… Now we will concentrate on seeing Australia,” Bedi says.
This group is confident in their financial future and focused on getting the most out of life, the report says. And 92 per cent of them are very or fairly confident that they will be able to afford their lifestyle.
Content retirees
Content retirees account for 21 per cent of those surveyed.
This group still spends, but they spend mindfully. They may choose to only have one car, stay home more or socialise a bit less. But importantly, they don’t feel as though they are missing out.
“There’s something to be said for slowing down and smelling the roses in retirement. Content retirees are spending less than they did before, but they’re comfortable with that and enjoying what they have,” Minney says.
Retirees Ranbir and Rani Singh Bedi at Ramsgate Beach. Glenn Campbell
As far as wealth goes, they are represented at the highest and lowest levels – with the bulk in the $300,000 to $1 million range, but about 10 per cent having more than $1 million.
Cautious retirees
This group accounts for 14 per cent of those surveyed. Importantly, their income levels and demographics are very similar to those of the content retirees.
But cautious retirees have a different mindset from the content.
“The mindset of the content people is different. … They’re saying, “Well, actually, this is pretty good because my life’s not as busy. I’m having a lot of fun. I’m enjoying it,” Minney says.
Cautious retirees are more worried about the future,” Minney says.
“They’re saving and crimping, and they’ve got that negative mindset … They worry about what they don’t have.”
So while they have savings, they fear running out of money.
While only half of them expect to leave any superannuation to their children, 74 per cent were confident that they could fund their lifestyle, provided they were careful.
Concerned retirees
This group represents about 9 per cent of those surveyed, but Minney notes that they would be a bigger group in a survey that didn’t start with wealth of $100,000.
These people are living on a tight budget because they have to. They have a much lower income than while they were working.
A typical comment is: “I have to watch every bit of spending and am tightening up further.”
They are more likely to be worried that they won’t have enough money to support their retirement. They rely on the age or disability pension for the bulk of their income and are stretching their savings to make them last.
They might feel like they cannot afford the minimum lifestyle that they expected in retirement.
The challenge for all the personas is predicting how much they will spend beyond the next one or two years. Only 11 per cent of retirees are confident in predicting how much money they will need over the next decade.
But that’s not something that concerns the Bedis.
“I keep having discussions with my financial adviser. … He says you can be comfortable right up to the age of 90. So you don’t have to worry or stress about anything at all,” Bedi says.
