Financial advisers are increasingly focused on addressing retirees’ concerns about outliving their savings amid rising life expectancies and shifting retirement spending patterns. With average life expectancy now about 81 years for men and 85 for women, retirees who step down at around age 64 face potentially two decades or more of financial uncertainty.

Hugh Robertson, founder of Centaur Financial Services, says he typically plans for clients to spend up to 30 years in retirement. “With medical advances, you’re likely to live longer and have a better quality of life than previous generations,” Robertson said. He emphasized the growing prevalence of the “fear of running out” (FORO) as a major psychological hurdle for retirees. “Financial literacy levels are low, so people often don’t know how much they can safely spend,” he explained.

Spending during retirement is rarely consistent. Robertson describes it as a U-shaped curve, where retirees generally spend more in the first 10 years, actively engaging in travel and other pursuits. Spending then slows down during middle retirement years before rising again in later years due to increased healthcare and aged care costs.

Olivia Maragna, co-founder of Aspire Retire Financial Services, reviews client spending and longevity projections twice yearly, using multiple scenarios to account for uncertainties such as market downturns. “We develop a base case as well as a more pessimistic outlook to help clients understand their financial resilience,” she said. This approach also helps clarify whether clients can leave inheritances or need to adjust spending.

Maragna noted that retirees often underestimate the potential growth of their superannuation savings after retirement and may overlook possible inheritances, either from parents or prior generations. However, she warns against relying on inheritances, viewing any received as a bonus rather than a certainty.

James Wrigley, a financial adviser working with clients across the wealth spectrum—from those relying on government pensions to multimillionaires—said concerns about running out of money affect clients regardless of their financial status. He advocates for using lifetime annuities to manage longevity risk.

Wrigley explained that annuities provide a steady income stream, reducing spending anxiety. He highlighted a government rule that assesses eligible lifetime annuities at 60 percent of their purchase price when determining pension eligibility, potentially making annuities a strategic tool for retirees seeking age pension benefits.

“Even clients with large retirement savings of $3 million to $4 million can face longevity risk,” Wrigley added. “Annuities function almost like a salary, delivering regular monthly payments and offering peace of mind that income will continue.”