From assets to income: A goals-based approach to retirement spending

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Timothy Smart; Nathan Zahm, CFA, FSA; Aidan Geysen; and Colleen M. Jaconetti, CPA, CFP®

Key points

■ While the population and life expectancies of retirees in Australia increase, portfolio yields remain at historically low levels. Further, as the superannuation system matures, more Australians are retiring with meaningful balances and are dependent upon them to sustain their livelihood throughout retirement. This confluence of circumstances means the need for retirees to implement informed portfolio spending strategies is more critical, and yet more complex, than ever.

■ For retirees, the stakes are high, and the impact of sub-par decisions can be severe. While every retiree’s financial situation is unique enough that there is no one-size-fits-all strategy, developing and implementing a spending strategy can increase one’s confidence in their ability to meet his or her retirement goals.

■ Assets can be turned into income through regular withdrawals from a retiree’s current holdings or by purchasing an investment product that is specifically designed to provide regular distributions. A key consideration for any retiree though will be aligning the strategy and product with the key goals they hope to achieve and the risks they face.

■ Regardless of the means—a product offering an automated distribution feature, an annuity, or a goals based spending strategy developed with an advisor—the combination of complexity and consequences underscores the need for, and the value of, skilful guidance.


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