Chapter One represents the active and aspirational years of retirement, typically between ages 60 and 75, when retirees are focused on lifestyle, travel, family and making the most of their independence. Chapter Two encompasses later life, where uncertainty around health, longevity, aged care needs and financial security becomes more prominent. While retirees can easily visualise and plan for the first chapter, the second is often difficult to imagine, leading to fear, caution and delayed decision-making.
Drawing on Australian behavioural research, the article explores how this mindset contributes to common retirement behaviours, including underspending, drawing only minimum pension amounts, avoiding complex decisions and favouring flexibility over long-term commitments. The article highlights how behavioural biases such as present bias, procrastination, regret aversion and decision inertia can prevent retirees from implementing strategies that may improve both financial and lifestyle outcomes.
For financial advisers, the framework provides valuable insights into building client confidence and overcoming decision paralysis. It examines practical advice considerations, including the importance of addressing long-term income security early and using income layering approaches that balance certainty with flexibility.
By recognising the psychological realities of retirement decision-making, advisers can better support clients in achieving the retirement they want today while maintaining confidence about the years ahead.
Read the full CPD article and complete the accredited quiz to earn 0.5 hours of FAAA CPD in Client Care & Practice (Retirement).