How much to spend in retirement: the ASFA standards, the go-go years, and the underspending pattern

If you are a retiree, one of the harder questions you face is how much to spend. Income is largely fixed. The retirement period is uncertain. Future needs — particularly health and aged care — are unknowable. And decades of saving habit do not reverse easily. The result, for many Australian retirees, is a pattern of underspending in early retirement: being cautious at exactly the point in life when health and capability are best, and enjoying less of the retirement they accumulated for.

This article covers three frameworks for thinking about retirement spending: the ASFA Retirement Standard, the go-go/slow-go/no-go model, and the drawdown rule of thumb that is used to assess whether spending is broadly calibrated to the balance available.

What is the ASFA Retirement Standard?

The ASFA Retirement Standard is published quarterly by the Association of Superannuation Funds of Australia and provides budget benchmarks for "comfortable" and "modest" retirement, at both couple and single levels. It is the most widely referenced benchmark for retirement spending in Australia. Latest published ASFA Retirement Standard figures (December 2025 quarter, released February 2026 — latest available):

Source: ASFA, https://www.superannuation.asn.au/wp-content/uploads/2026/02/ASFA_Retirement_Standard_Budgets_Dec-25_quarter.pdf. Figures assume the retiree owns their home outright and supplements drawdown with a partial Age Pension. The implied lump sums to fund a comfortable standard at age 67: $630,000 single / $730,000 couple (per ASFA modelling). Modest-standard figures are lower; updated quarterly. The standard is updated each quarter to reflect inflation and price movements — confirm latest at superannuation.asn.au.

The Standard is built on a basket of expenses considered representative of each lifestyle level: housing costs (on the assumption of outright home ownership), food, transport, leisure, utilities, healthcare, and other categories. That homeownership assumption is important — renters face meaningfully higher costs than the ASFA figures suggest, because rent is a major ongoing expense that the standard does not include.

ASFA benchmarks are calibration tools, not prescriptions. Many retirees spend below the ASFA Modest benchmark without any distress — particularly those in regional areas, those with low fixed costs, or those whose lifestyle simply does not require high expenditure. Others spend well above the Comfortable benchmark, particularly active travellers and those who contribute financially to family members. The reference points frame the conversation rather than dictate the answer.

What is the go-go/slow-go/no-go framework?

A useful conceptual framework for retirement spending is the three-phase model. In the go-go years — typically the sixties and sometimes into the early seventies — retirees are active, travelling, engaging socially, and often spending more than they will at any later point. This is the phase where physical capability and interest align. In the slow-go years, typically from the mid-seventies, activity reduces, travel becomes less frequent, and spending tends to decline. In the no-go years, mobility and independence reduce further; spending on healthcare and eventually care costs may rise, while discretionary spending falls substantially.

The framework is approximate — individual circumstances vary considerably, and some retirees remain highly active into their eighties while others slow considerably earlier. But it captures a meaningful reality: retirement spending is not constant, and planning that holds it flat in real terms misrepresents how it actually changes. For retirees who are genuinely anxious about running out of money, the framework offers a reframe: the go-go years are precisely the time to spend, because the slow-go and no-go years will, for most people, involve reduced consumption rather than higher consumption.

What is the 4% drawdown rule of thumb?

The 4% rule — a heuristic originating from US financial planning research — suggests that a starting drawdown rate of approximately 4% of the initial retirement balance, indexed to inflation, is sustainable for a 30-year retirement across most historical return scenarios. For a retiree with $1 million in super, 4% is $40,000 per year.

This rule has real limitations for Australian retirees. The original research was based on US market return data. It does not account for the Age Pension floor that most Australian retirees eventually access as their super balance depletes — which makes the Australian retirement income system considerably more resilient than the raw 4% calculation suggests. And it does not adjust for actual experience: if returns in the first few years of retirement are poor, the starting balance for future drawdowns is lower, and the rate needs to be reassessed.

As a rough diagnostic, though, it remains useful. A retiree drawing 2% to 3% of their balance has almost certainly got headroom to spend more. A retiree starting at 5% or 6% is not necessarily in trouble — particularly if they expect the Age Pension to progressively supplement income as the balance depletes — but the trajectory deserves attention. The minimum pension drawdown rates set by the superannuation rules (4% at age 65-74, rising with age) were designed as minimums, not as recommended levels; many retirees who draw only the minimum are underspending relative to what the balance could sustain.

What is the underspending pattern in retirement?

Research on retirement income — including the Australian Government's Retirement Income Review — has consistently found that many retirees accumulate more in real terms during retirement than they drew down: the combination of returns, minimal drawdown, and later Age Pension access leaves balances higher than they were at retirement, in some cases. For most of those retirees, this was not a deliberate choice to build an estate. It reflected anxiety about running out, inertia in savings habit, and uncertainty about future needs.

For some retirees, leaving a substantial estate is a deliberate priority and a genuine expression of their values. For others, the unspent assets represent retirement they could have had and did not take. The advisory contribution is helping retirees be deliberate: if preservation is the goal, plan it explicitly. If enjoyment of retirement is the goal, model what the balance can sustainably support and spend accordingly.

Late-life care costs are the legitimate uncertainty that gives most retirees pause. The concern is real — residential aged care can be expensive, and that cost is largely outside Medicare. Planning for a buffer — either through the balance itself, through insurance, or through property assets — addresses that uncertainty directly, rather than through blanket underspending in the go-go years.

How should you calibrate your spending?

For practical calibration, the questions worth working through are: What lifestyle do I want in the go-go years, and what does that actually cost? What does my balance support at 4-5% drawdown? Does my planned spending reflect the go-go/slow-go/no-go trajectory rather than a flat line? Is there an explicit buffer for late-life care and health costs? And is my spending level — or restraint — the result of deliberate choice, or of anxiety that the numbers do not actually support?

A licensed financial adviser can run the modelling, test the scenarios, and give a considered view of what the balance genuinely supports. For retirees who have spent decades accumulating and who are now drawing down cautiously, that modelling sometimes reveals — often unexpectedly — that the retirement they envisaged is well within reach.

Sources

• superannuation.asn.au — ASFA Retirement Standard Budgets Dec 25 quarter