The index, which surveyed more than 2,000 Australians aged 60 and over, found that overall happiness among older Australians remains strong, with this year’s score rising to 69.5, up from 68.9 in 2025. However, the findings reveal that cost-of-living pressures are weighing heavily on the minds of retirees.

"One of the strongest insights is the powerful role purpose plays in retirement happiness," said Challenger Chief Executive, Customer, Mandy Mannix. "People who volunteer, stay active in their communities, and maintain hobbies and interests consistently report higher levels of happiness."

The survey found that volunteers are the happiest among older Australians, with an average happiness score of 77, compared to 69 for those who do not volunteer. Married couples also fared better in terms of happiness, scoring 72 compared to 66 for unmarried individuals. Homeowners reported a score of 73, significantly higher than the 60 recorded by non-homeowners.

The index identified activities and hobbies (80), a clear sense of purpose (72), and physical and mental health (68) as the biggest drivers of retirement happiness. Having enough money to enjoy retirement was a top priority for more than two-fifths (44%) of Australians aged 60 and over, ranking just behind physical health (58%) as the most important factor for a happy retirement.

Nevertheless, the research highlighted significant concerns about financial security. Two in three Australians aged 60 and over believe inflation and the cost of living are the most critical factors to plan for in later years of retirement. This challenge is particularly acute for women, who often retire with less superannuation savings.

"Today’s retirees are the first generation having built significant superannuation savings. Yet, after decades of focusing on saving, many retirees find it surprisingly difficult to switch to spending once they retire," Ms Mannix explained.

The survey revealed that women (48%) are more likely than men (43%) to rank the fear of running out of money in retirement as one of the top three concerns impacted by the rising cost of living. Pre-retirees (49%) are also more likely than retirees (39%) to cite this as a top worry.

"Most Australians have felt the pressure of rising costs. Whether it’s paying for essentials like petrol, going out for lunch, or taking a holiday. These higher prices can be felt even more by retirees who now face the reality of living on a set amount of money for the rest of their lives," said Ms Mannix.

On average, Australians aged 60 and over believe the minimum amount of annual income needed for a comfortable and happy retirement is $70,398 per person, or approximately $1,350 per week. This figure is notably higher than the ASFA Retirement Standard, which recommends $54,840 a year ($1,055 per week) for a comfortable lifestyle for a single person.

"The dollar value of a lump sum when you retire can seem like a lot of money, but it has to last a long time. It can be hard to know how much to withdraw, knowing that the purchasing power of $1 million today can halve in 20 years’ time. The impact of inflation can be dramatic, and it is a real concern," Ms Mannix added.

The survey also highlighted a significant knowledge gap regarding financial strategies for retirement. Nearly four in five Australians aged 60 and over (76%) said they would be much happier with a guaranteed income for life in retirement. However, more than half (59%) did not know about or hadn’t heard of lifetime income streams as a financial strategy.

"After decades of savings, we are asking retirees to do something that feels completely counter-intuitive – to start spending. That change requires financial guidance and support," Ms Mannix said. "Older Australians want a guaranteed regular income in retirement to help manage day-to-day expenses that can provide financial security for life, but access and awareness remain key barriers."

The survey found that free education provided by a super fund or bank (52%), government agency (50%), or paid education from a professional financial adviser (39%) were the top preferred approaches to building financial knowledge and boosting retirement happiness. With better guidance and education, retirees can bridge the gap between their expectations and the reality of retirement, ensuring a more secure and fulfilling future.