Retirement happiness on the rise, but costof-living worries cloud confidence
Most Australians have felt the pressure of rising costs.
Australians aged 60 and over remain positive about retirement, but rising cost of living continues to impact lifestyle, financial security, and confidence their money will last, according to the third annual Challenger Retirement Happiness Index.
Challenger, in partnership with independent research provider, YouGov, surveyed more than 2,000 Australians aged 60 and over and found overall happiness among older Australians remains strong, with this year’s Challenger Retirement Happiness Index score rising to 69.5 (up from 68.9 in 2025).
Volunteers were found to be the happiest older Australians, with an average happiness score of 77 compared with 69 for those who do not. Married couples (72 vs 66 for unmarried) and homeowners (73 vs 60 for non-homeowners) also beat the benchmark.
More broadly, the Index showed activities and hobbies (80), a clear sense of purpose (72), and physical and mental health (68), remain the biggest drivers of retirement happiness.
Having enough money to enjoy retirement was a top priority for more than two-fifths (44%) of Australians aged 60+, ranking just behind physical health (58%) as the most important factor to a happy retirement.
The research found that retirees key savings goals were certainty their money will last for life (72%), confidence to cover health and aged care costs (65%), and maintaining their lifestyle (53%).
Commenting on the findings, Challenger Chief Executive, Customer, Mandy Mannix, said the research shows life can get even better in retirement but confidence and certainty were key.
“One of the strongest insights is the powerful role purpose plays in retirement happiness. People who volunteer, stay active in their communities, and maintain hobbies and interests consistently report higher levels of happiness,” said Ms Mannix.
“It goes to show that retirement really can be the prime time of life. The key is to have the confidence
and certainty to relax in those golden years, knowing your money will last and you can afford to enjoy all
retirement has to offer,” she said.
Cost of living continues to bite
For the third straight year, cost of living continues to be a concern for older Australians who are worried about the impact of rising costs on lifestyle (57%), financial security (54%), and running out of money in retirement (46%).
Two in three (67%) Australians aged 60 and over believe inflation and cost of living are the most important thing to plan for in later years of retirement, with the challenge particularly acute for women who often retire with less super.
Women (48%) are more likely than men (43%) to rank fear of running out of money in retirement as one of the top three things impacted by the rising cost of living. Similarly, pre-retirees (49%) are more likely than retirees (39%) to rank this as one of their top three concerns.
“Today’s retirees are the first generation having built significant superannuation savings. Yet, after decades of focusing on saving, many retirees find it surprisingly difficult to switch to spending once they retire,” said Ms Mannix.
On average, Australians aged 60 and over believe the minimum amount of annual income (per person) needed for a person aged 65 or more to live comfortably and happily in retirement is $70,398 or approximately $1,350 per week. This is higher than the ASFA Retirement Standard that recommends $54,840 a year ($1,055 per week) for a comfortable lifestyle for a single.
“Most Australians have felt the pressure of rising costs. Whether it’s paying for essentials like petrol, going out for lunch, or taking a holiday. These higher prices can be felt even more by retirees who now face the reality of living on a set amount of money for the rest of their lives,” she said.
“The dollar value of a lump sum when you retire can seem like a lot of money, but it has to last a long time. It can be hard to know how much to withdraw, knowing that the purchasing power of $1 million today can halve in 20 years’ time. The impact of inflation can be dramatic, and it is a real concern.
“That’s the power of a guaranteed regular income. A ‘paycheck’ means retirees know their needs are taken care of giving them greater confidence to spend on their activities and hobbies that give them purpose and happiness in retirement,” added Ms Mannix.
Guidance needed to improve retirement outcomes
Nearly four in five Australians aged 60+ (76%) said they would be much happier if they had a guaranteed income for life in retirement. Yet, more than half of all Australians 60+ (59%) did not know about, or hadn’t heard of, lifetime income streams as a financial strategy for retirement.
A clear knowledge gap persists, despite 1 in 3 Australians (30%) saying they would be happier in retirement with greater financial education. Free education provided by a super fund or bank (52%), government agency (50%), or paid education provided by a professional financial adviser (39%) were the top three preferred approaches to building financial knowledge and boosting retirement happiness.
“After decades of savings, we are asking retirees to do something that feels completely counter-intuitive – to start spending. That change requires financial guidance and support,” Ms Mannix said.
“Older Australians want a guaranteed regular income in retirement to help manage day-to-day expenses that can provide financial security for life, but access and awareness remain key barriers.”
