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Dear Aussie Advisor: I’m 71, retired, have $240k in super and $40k in savings

Brendan Gow
·9-min read
(Source: Getty, Aussie Advisor)
(Source: Getty, Aussie Advisor)

Ever wondered what to expect from financial planning? Or do you have money or investment questions you’d love some guidance on from a financial advisor?

We bring you – ‘Dear Aussie Advisor’: Our new weekly advice column that sees our very own Aussie Advisor, Brendan Gow, answer your questions and show you the value of a solid financial plan.

Dear Aussie Advisor

I’m 71, retired, have about $240,000 in my superannuation and own a home recently valued at $850,000. I have around $10,000 in shares at the moment, and $30,000 in savings. I don’t feel like my savings or my super are enough. I am considering downsizing, and want to invest more so I’m not just relying on my super. What should I do?



Hi Greg,

What a journey you’re embarking on.

Whilst retirement is very fulfilling, it can also be daunting, simultaneously. When it comes to retirement investments, it’s important to consider not only the types of investments we choose, but also the direction in which we choose to go in terms of our personal assets. This is because, at this stage of our lives, the aspects of our personal finances are impacted by our every move.

Superannuation vs pension

Let’s start with some presumptions. You’ve mentioned you are ‘retired’, however, also referred to your retirement savings as ‘superannuation’ and not your ‘allocated pension’.

Whilst, to most of us, superannuation is the term we use for our retirement savings, once you retire and start to draw from your superannuation, your superannuation typically needs to be converted into an account-based pension. Remember – superannuation is for accumulating your retirement wealth. Account based pensions are for distributing that wealth back to you as a retiree.

Retirement itself is also a loose term these days. Most people begin to slow down or reduce their work hours but continue to work in some capacity instead of jumping straight into retirement. In some cases, they won’t tap into their superannuation until after the age of 65. Based on your terminology, I am making the presumption that you haven’t accessed your superannuation yet, and you’re just stepping into retirement now.

Should I put money in investments or superannuation?

As someone over the age of 67, for you to continue to contribute to superannuation outside of your employer’s super contributions, you must meet a few requirements. Firstly, you must meet ‘the Work Test’. This determines whether you are able to contribute to your super or not, and requires you to have gainful employment leading to a minimum of 40 hours of work within a 30-day period in that financial year should you wish to continue contributing.

You will then do an assets and income test which determines how much, if any, age pension you will receive from the government.

You have mentioned that you have some investments outside of your superannuation which you’re looking to derive an income from to ensure you are not solely dependent on your superannuation in retirement.

Typically, someone at your age would have a ‘growth assets to income assets’ ratio of 20 per cent to 80 per cent, respectively. This is a means test we do to establish your risk tolerance in terms of investments. As a retiree, it is important to understand the potential limitations to your investor risk tolerance.

A large decline in equity markets could lead to a loss of income if the stock market turns down considerably, such as during the COVID-19 pandemic. So, it is important to have a very well-balanced investment portfolio.

For example, right now, COVID-19 has led many large-cap businesses to cut their dividends, whereas, ordinarily, these dividends would be considered a given. For example, ANZ bank. Typically, it offers a strong 80c per share, however, in this run, it has only paid 25c per share.

Should I downsize my home?

When it comes to the consideration of downsizing your home, this is a common theme around the topic of retirement.

Whilst the common thought to sell a current home, buy a smaller home at a lower price and live off the income of the remaining sale price is great idea in principle, you must also consider the impact this will have on your position should you be dependent on any age pension entitlements from government social security, or Centrelink.

Your principal place of residence (your home) is excluded from your assets test, so any money made on the sale of your property will be counted as an investment asset, reducing the amount you are eligible to receive in government benefits.

As a positive, the 2017-2018 budget announced the government would allow for a ‘downsizer contribution’. This allows Aussies over the age of 65 to contribute proceeds of up to $300,000, received from the sale of their personal home if owned for 10 years or more, to their superannuation fund.

Why would we do this? Well, the simple answer is that having that money in your super as opposed to in your own personal name makes the tax on earnings and capital gains more favourable. Also, depending on the income stream you produce from your superannuation, it can be counted more favourable against the assets and income test for age pension.

Here’s your strategy

We’ll approach this strategy differently, assessing two possible options available to you. You should also consider that, when you switch your superannuation into an income stream in the form of an allocated pension, the minimum you must draw as an income stream is 5 per cent of the total funds.

While, due to COVID-19, this has been altered temporarily to 2.5 per cent, let’s take the standard values into account and look at the long-term picture for these calculations.

Potential strategy 1

You could choose to make no changes to your current situation and not downsize your home but proceed to convert your super into an account-based pension to help meet your income requirements. You could choose to use your personal cash and shares to help supplement additional expenditure or use towards any unplanned emergency expenses.

Taking this strategy into consideration, you would receive the full age pension ($944.30 per fortnight, or $24,455 per annum based on current Centrelink rates) from Centrelink. Then you could top up the rest of your personal budgetary requirements from your account-based pension.

Potential strategy 2

If you downsized your home and had surplus funds, e.g. $300,000 you could use the downsizer contribution rules to add up to $300,000 to your superannuation, bringing your super balance to $540,000.

Assuming your personal assets outside of super remain unchanged, this scenario would provide age pension entitlements ($51 per fortnight or $1,339 per annum). This would mean you would have to fund the majority of your personal budgetary requirements from your account-based pension.

Potential strategy 3

If you downsized your home and purchase a new one for $650,000, contributing $150,000 to super using the downsizer contribution, this would bring your superannuation balance to $390,000.

Assuming your personal assets outside of super remain unchanged, this scenario would receive more age pension entitlements ($308 per fortnight or $8,016 per annum). Then you could top up the rest of your personal budgetary requirements from your account-based pension.

I would consider maintaining your cash of $10,000 in an emergency fund to ensure you always have access to quick cash if needed.

In terms of your investment portfolio outside of your superannuation, you should consider speaking with an investment advisor who can give you some direction on investing for income.

As previously mentioned, there are investments out there specifically focused on paying an income, not just invested for growth. You may like to consider holding a large percentage of that money in income producing assets, such as Hybrids or bonds.

Keep an eye out for high-yielding stocks, typically banks, and companies like Telstra. You could also consider a small amount invested in growth stocks to help build the value of your portfolio, as these will typically ensure that, as you draw an income from your investments, the growth will reduce erosion of your assets.

Whilst on the topic of eroding assets, the amount you choose to draw from your allocated pension should be carefully considered. Keep these three things in mind:

  1. The cost to your allocated pension from things that aren’t glaringly obvious are at an average inflation of around 2 per cent per annum.

  2. The cost (annual fees) of your allocated pension should be between 1 per cent and 1.5 per cent.

  3. The amount you draw each year should be between 5 per cent (based on age 71).

So, assuming you’re drawing 5 per cent per annum, inflation is at 2 per cent, the fees are approximately 1 per cent, this is an annual reduction of your balance of 8 per cent.

You should take this into consideration when formulating your retirement investment strategy.

Good luck,

The Aussie Advisor

Brendan Gow, The Aussie Advisor, is a Senior Private Wealth Advisor. Prior to his current role in a leading Private Wealth Firm, Brendan worked in financial advice across banks and institutions in Australia, and spent four years in Dubai as a Global Investment Advisor. With over 15 years of experience in wealth and financial management, Brendan delivers investment advice on a wide range of areas, including equity trading, portfolio and risk management, margin lending, bonds and fixed interest.

Brendan Gow, an authorised representative (no. 427470) of Shaw and Partners Limited AFSL236048 (the “Aussie Advisor”). This article has been prepared without taking into consideration any investor's financial situations, objectives or needs. Accordingly, before acting on the advice in this article, if any, you should consider its appropriateness to your financial situation, objectives and needs. Every reasonable effort has been made to ensure the information provided is correct, but we cannot make any representation nor warranty as to the accuracy, completeness or currency of that information. To the extent permissible by law, no responsibility for any errors or misstatements is taken, negligent or otherwise. Shaw or its authorised representatives may also receive fees or brokerage from dealing in financial products, see Shaw’s Financial Services Guide for information about the services offered by Shaw available at

Have a question about your finances for the Aussie advisor? Email, and we’ll send it over to Brendan anonymously.

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The All Markets Summit returns on Thursday 17 September 2020.
The All Markets Summit returns on Thursday 17 September 2020.