Preparedness soars while confidence lags
While Australians are becoming more prepared for retirement, they are not becoming more confident about how their retirement will look.
These are the powerful – and seemingly contradictory – findings of recent studies into the mindset and behaviours of Australians approaching retirement.
According to Colonial’s 2026 Rethinking Retirement research2, 51% of Australians now feel prepared for retirement, up from 44% a year earlier and 38% in 2024.
Yet ASIC’s Moneysmart survey3 from 2025 appears to tell a different story, finding only one in three Australians on the cusp of retirement are confident they will have a financially comfortable future.
Understanding how both findings can be true requires us to understand that preparedness and confidence are two very different dimensions of retirement.
The adviser actions required to strengthen each dimension are equally different. While a well-constructed financial plan can optimise preparedness, it doesn’t solve for confidence, if confidence is a critical input to the process itself.
The idea that confidence is not simply an outcome of good retirement planning – but is actually a prerequisite – was central to our Two-Chapter Retirement framework, and in this article, we explore retiree confidence in more detail – how it is measured and how it is created. We also consider the practical ways advisers can help clients mitigate a lack of confidence, from the timing and shape of client engagement to strategies and product structures.
Confidence and preparedness are not the same things
Retiree preparedness reflects readiness, and is steeped in functional dimensions of retirement:
- Am I financially prepared?
- Do I have a documented plan?
Confidence on the other hand is an emotional dimension:
- Am I confident that I won’t outlive my savings?
- Am I confident enough to spend?
- Am I confident enough to make the big decisions often required in retirement, such as downsizing or committing capital?
The confidence gap as real behaviour: the data
The Conexus Institute4 posited that a lack of confidence to act can manifest in several ways, undermining the willingness to spend, take on investment risk, and commit capital, and a wealth of data illustrates the extent of such behaviours in the real world.
Both Milliman and the Grattan Institute, for example, found strong evidence of retirees spending more frugally than their circumstances would permit. Grattan’s 2025 Simpler Super study5 found around half of all retirees with account-based pensions draw only the legislated minimum, observing that more than 40% of pensioners were net savers.
Milliman analysis6 of more than 300,000 Australian retirees found spending cuts through retirement tended to exceed expert modelling, beyond levels explained by resource constraints alone.
Lack of confidence can also explain the wide variation between perception and reality in terms of retirement savings needs. The 2026 Rethinking Retirement report7 found Australians now believe they need more than $1 million to retire comfortably, a figure that jumped $183,000 in a single year. By comparison, the ASFA Retirement Standard puts the required super balance at $690,000 for a couple and $595,000 for a single.
The same dynamic can also be seen in retiree product choices. Challenger's 2026 Retirement Happiness Index8 found that while 76% of Australians aged 60 and over would be significantly happier if they had a guaranteed income for life, 59% had never considered a lifetime income stream solution.
The triumph of loss aversion over the need to mitigate longevity risk is also seen in overly conservative retiree investing behaviour. A US study9 found that 86% of retirees exposed to investment markets failed a basic diversification test, with 49% holding nearly half their assets in cash, well above the recommended 20% benchmark.
Beyond projections and returns - the components of confidence
Understanding the underlying components of retiree confidence helps us understand why it is so resistant to the pure numbers and technicalities of retirement.
Researchers at Monash University10 identified four dimensions of retirement confidence:
- Financial awareness and skills (30%)
- Health and wellbeing (30%)
- Social factors (20%) and
- Retirement awareness and planning (20%).
Significantly, the study found that hard financial factors account for only 30% of retirement confidence, meaning a technically sound retirement strategy only addresses a third of the problem. The rest is shaped by the advice relationship itself, by how well the adviser understands what the client is afraid of, how well they have helped the client picture the future, and how confident the client feels in the people and structures supporting them.
6 practical ways advisers can build client confidence
The keys to building retirement client confidence can be found in the timing and nature of your engagement, and in contemporary strategies and product solutions designed specifically to deliver certainty and flexibility in retirement incomes.
1. Treat confidence as an objective rather than an outcome
Specifically talk about it during discovery meetings. Ask the client how confident they feel on a scale of 1 to 10. Ask them again from time to time and track the progress. At review time, check spending patterns for signs of excessive caution, and ‘unleash the shackles’ if necessary.
2. Engage with clients earlier
Confidence is built gradually, through planning during the lead up to – rather than at the point of – retirement. The earlier the engagement, the more time there is for clients to build goal clarity, become familiar with strategies, and course correct if needed.
3. Avoid unrealistic benchmarks
Setting unrealistic or arbitrary anchor points (such as the ASFA benchmarks or $1 million) as key to your client enjoying retirement can undermine confidence and sap the motivation to engage with your advice. Just like the advice itself, tailor the measures to the client and the circumstances.
4. Shift the conversation from balances to income
Loss aversion is triggered when balances fall, so reframe performance around long-term income projections rather than portfolio value. Bucketing strategies reinforce this, as clients feel less exposed when they know near term needs are secured, and will be more willing to hold growth assets with the remainder.
5. Use AGILE to secure Chapter Two and unlock Chapter One
When clients know their needs in the uncertain Chapter Two are secured, they feel more confident to enjoy Chapter One. But while traditional annuities offer certainty, their lack of flexibility demands higher commitment. Account Based Pensions on the other hand provide flexibility without the certainty. Products like AGILE from Allianz Retire+ resolves both needs simultaneously by allowing clients to calibrate how much of their income they choose to guarantee. As part of an income layering strategy, AGILE effectively allows retirees to soften commitment levels, creating confidence without the fear of making an irreversible decision.
6. Use reviews to renew permission
CFS research11 found 77% of advised retirees are currently enjoying retirement, compared with 52% of those who have never received advice. This speaks not just to your role in providing a framework and progress updates, but your role as a confidence coach. Telling your clients ‘You are on track, take that holiday’ provides a priceless confidence boost that even the best investment performance can’t deliver.
Conclusion
Confidence is not an outcome of good advice, it is a critical input, an enabler without which advice cannot be fully effective and retirement outcomes will fall short of what a retiree’s financial resources would allow.
Advisers play a critical role beyond the purely technical, and can call on a variety of engagement techniques, strategies, and product solutions to give clients the confidence to take the actions necessary to live an epic retirement.
