Retirement is an odyssey - here are four tips to navigate it

The Odyssey, currently packing out cinemas, is a story of mythological creatures, shipwrecks and a decade-long journey home.

Each time Odysseus draws close, another obstacle appears: a storm, a monster, a god with a grudge. He knows where home is. Getting there is the hard part.

Retirement can feel like its own odyssey.

After decades of being told to save, Australians suddenly face a very different challenge: spending the nest egg they spent 40 years protecting and not knowing how long it will need to last.

The obstacles are less dramatic than the terrifying Sirens and Cyclops, but no less uncertain. Nobody knows exactly how long they will live, what they will need to spend each year or what their future circumstances will look like.

Even well-funded retirees can therefore become reluctant to spend.

Behind that reluctance sits regret risk: the possibility that, later in retirement, retirees look back and regret having been overly cautious in the earlier years.

Spending too cautiously can mean missing experiences that may not come again, or the retirement assets those savings were built to fund.

To combat regret risk, Odysseus offers a useful lesson. He does not wait for calm seas or danger to disappear.

He prepares, adapts his course and puts safeguards in place, so no setback sinks the voyage to get where he wants.

Retirement planning calls for the same approach. Here are four ways to navigate uncertainty without letting fear set the course.

1. Know what it costs to live the retirement you want

Start by separating the "must-haves" from the "nice-to-haves".

Add up essential annual expenses such as housing, groceries, utilities and healthcare, then distinguish them from flexible spending such as, on travel, hobbies or helping family.

Next, subtract dependable income, such as the Age Pension or a defined benefit pension. The remainder is the essential income gap.

ASFA's Retirement Standard puts the cost of a comfortable lifestyle at roughly $56,000 a year for a single retiree.

If $40,000 represented your must-have expenses and dependable income covered $30,000, the essential income gap is $10,000.

The remaining $16,000 represents flexible spending.

You can then consider how much of the essential gap should be covered by an income for life and how much of your savings should stay accessible.

This turns an abstract fear into a manageable number. Instead of worrying whether every dollar will last, you can focus on the income your daily life depends on.

2. Build flexibility into your spending

Generation Life's 2025/26 Navigating Uncertainty research found that two in three Australians believe superannuation rules change too often to plan confidently.

The concern is understandable, but markets, inflation and policy settings may never behave exactly as expected.

Rather than trying to predict every possibility, consider how your spending might change from year to year: essential expenses tend to stay roughly the same, while travel, home improvements or family support may rise and fall.

An account-based pension can flex with these changes, allowing withdrawals to adjust as your needs evolve, drawing more in a big-spend year and less after weaker market performance.

The aim is not to forecast every obstacle. It is to build enough flexibility into the plan to respond when circumstances change.

These decisions can involve significant financial considerations, so professional financial advice can help determine an appropriate approach.

3. Recognise that under-spending has a cost too

After a lifetime of saving, drawing down capital can feel reckless, even when the retirement plan allows for it.

This is where regret risk comes into play.

Spending too cautiously in the early years of retirement can lead to looking back later with regret over missed trips, less support for family, and experiences postponed until they may no longer be possible.

Having a regular income provides a structured way to help meet essential expenses, and bypasses the need to repeatedly decide when to access capital.

When essential expenses can be covered by a regular income, spending should feel more like using a retirement pay cheque rather than eroding a lifetime of savings.

A similar approach is to budget for enjoyment the same way you would budget for bills.

Someone with $12,000 a year earmarked for travel, hobbies and family time could transfer $1,000 a month into a separate account, reviewed annually with a financial adviser.

This makes enjoyment a planned part of retirement, rather than an expense they must repeatedly give themselves permission to make.

The objective is not to spend for the sake of it. It is to make deliberate choices before fear makes them for you.

4. Give different pools of money different jobs

It may be claimed that no single retirement solution is designed to meet every objective equally.

A retirement plan could weigh four broad priorities: longevity, or income that lasts throughout retirement; lifestyle, or funding the experiences and choices that matter; liquidity, or retaining access to money when circumstances change; and legacy, or supporting loved ones and leaving an inheritance.

Cash may cover near-term expenses, an account-based pension can provide flexible income and some access to capital, and growth assets can help savings keep pace with inflation over a retirement that may last several decades.

For some retirees, an investment-linked lifetime annuity such as LifeIncome may complement these sources as it provides a regular income for life.

Its income is linked to the performance of selected investment options, meaning payments can rise or fall from year to year and have the potential to grow over time.

This can help address longevity risk and provide greater confidence to spend from other assets.

The question is not which solution does everything. It is how different solutions can work together to meet different objectives.

The right combination will depend on individual circumstances, including spending needs, risk tolerances, health, family priorities and other assets, and is a conversation worth having with a financial adviser.

Remember what the voyage is for and don't let fear steer the ship

Odysseus's voyage was never about protecting his ship.

It was about getting home - what he wanted most. The ship mattered because it could take him there.

Retirement savings deserve the same perspective.

Success should not be measured by only how much remains untouched. Retirement savings are akin to the vessel.

A successful retirement plan can be measured by the life it makes possible: the trips taken, the family supported and the freedom to say yes to what matters.

After all, what is the point of preserving the vessel if fear prevents you from making the voyage?

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