So, you’ve reached retirement age and can finally enjoy a life outside of the obligations of work. You worked hard in your 30s, 40s, and 50s to build wealth in your Super and retirement funds. You might have invested some of that wealth, with the help of a financial planner, to maximise your income. You’ve planned for your retirement, and you already know how much you have saved and available to spend per year, but now you’re asking yourself: “what should I do with those savings?”.

This is a great question and one that can’t be answered definitively without personal advice from a financial adviser that has taken your whole financial picture into consideration. That being said, there are some things you could be thinking about to help you to figure out how to spend your retirement income wisely.

1. You might not need to be over cautious with your savings

According to a recent study, the majority of retirees in Australia are spending less than the value of the age pension alone each year. Though this might seem to make sense for retirees who only have the age pension as a source of income, it seems that retirees who have extra private retirement savings exhibit the same spending behaviour. The study, “Retirement Expectations and Spending Profiles”, from Milliman, analysed the annual expenditure of over 300,000 retirees.

It’s certainly a valid argument to suggest being frugal in order to hold onto your savings for any future unexpected expenses, such as medical bills. However, it seems probable that many retirees are actually overestimating the likelihood of these expenses ever occurring. Though this precautionary spending is admirable, it could be said that spending less than you can afford to is equivalent to unnecessarily denying yourself a more enjoyable retirement.

Another reason for this spending behaviour might be that retirees aren’t able to accurately estimate, and would probably prefer not to think about, how long they will actually need their retirement savings to last. Death is a difficult subject to think about. However, without considering your expected longevity you might end up spending more frugally than you really need to. It might be worth re-evaluating whether you really need to be as precautious with your savings as you first thought. After all, you only live once.

2. Consider how much you want to leave behind

You might be considering spending your hard-earned savings on big purchases like a new car, expensive holidays, or a second home overseas. And why not? You’ve earned that money through years of hard work, and you should be able to spend it as you see fit. Before you make any big purchases though, it’s worth considering how much of that money really is expendable.

If you don’t plan on leaving money as an inheritance for family members, then you’ll only need to plan for things such as living costs, medical bills, and other such costs. However, you might have wanted to leave something behind for children, friends, family, or even perhaps as charitable donations. It’s worth considering this when deciding how to spend your retirement savings.

3. Consider relocating

For many retirees, retirement is an opportunity to up sticks and move to a whole new location. Without work commitments, you’re free to travel and see more of the world. It can help your savings go further, too. Many countries have lower living costs than Australia and make great retirement destinations. You could reduce your expenditure on things like food, drink, and accommodation; leaving you more expendable cash to use however you wish. Countries in Asia, such as Indonesia, Thailand, and Malaysia are all great places to consider.

Read More: 6 Destinations Where Your Retirement Savings Can Go Further

Relocating overseas isn’t for everyone, though. If you want to stay in Australia but would like to make things a little more affordable, there are some great, affordable destinations in-country, too. Even if you choose to stay in your current location, it might be worth buying a new home. You might have had one family home for many years. Perhaps you have spare bedrooms now that are no longer needed. If so, downsizing can be a great way to free up even more cash, enjoy new surroundings, and find somewhere more fitting.

4. Develop hobbies

Figures from the ABS (Australian Bureau of Statistics) show that the average 65 to 74-year-old spends, on average, around 15% of his or her retirement income on recreation. This is a great way to spend your money as it’s potentially the most fun.

You might have had hobbies when you were younger that you never had time to pursue. Perhaps you had an interest in music, dancing, or artistry. Without the demands of work, you are free to explore these hobbies. Depending on how much you have saved, you might have enough expendable retirement income to justify splurging on a new guitar, some dancing shoes, or some painting equipment. Pursuing hobbies is a great way to have fun in your retirement and keep active and social.

5. Spending time with family

Having ample time to spend with loved ones is one of the most exciting prospects of retirement. Of course, spending time with your family won’t cost you a cent. However, if you have retirement savings to spare, you can maximise the quality of the time you spend with your family. Perhaps you’ve always dreamed of taking the grandchildren to Disney World. Or you might have always wanted to treat your children to a luxury family vacation. If you have enough saved up to justify spending some of your retirement savings on these things, they can be some of the most rewarding ways to spend your money.

This is also the time of life when you might like to get some estate planning advice.

Make it something you can look forward to

Retirement is the perfect time for fulfilling those dreams you never had the time or the money to be able to when you were younger. If you spend your money in the right way, your retirement years have the potential to be the best years of your life. Just make sure that you have a good retirement plan in place so that you can make the most out of them.

Need some help making your retirement plans a reality? Take the time to talk to an experienced financial adviser, like the team at Ethica Private Wealth Specialists on the Sunshine Coast, to get some guidance on how you can use your savings.