Stretching retirement income


Retirees can face some tough decisions if they find that their retirement income is not stretching far enough, particularly in the prevailing low-interest environment.



A reduction in spending is not really an option for those retirees who are already running a tight budget.

Certainly, some retirees think about returning to the workforce if possible, perhaps on a part-time basis. Continuing to work past traditional retirement ages provides an opportunity to save more for what will be a short and therefore less costly retirement.

In reality, retirees wanting to return to the workforce can struggle to find suitable jobs. And obviously numerous retirees cannot return to work for medical reasons.

Retirees who are finding that the income generated by their super and non-super portfolios (perhaps supplemented by the age pension) may consider seeking guidance from a financial planner about such issues as:

  • Making retirement budgets as efficient as possible. Particularly given Australia’s ageing demographics, it is inevitable that more retirees will seek advice on budgeting for retirement and efficiently drawing down on retirement savings.
  • Minimising investment costs. By lowering investment management costs, more of an investment’s return is left for the investor.
  • Looking at whether to take a total-return approach to investing. Many retirees try to base their retirement spending solely on the income or yield generated by their portfolios.  A classic Vanguard research paper, Total-return investing: An enduring solution for low yields, suggests that retirees consider taking both the income and the capital returns of a portfolio into account when setting retirement drawdowns and spending.
  • Avoiding taking excessive risks in the pursuit of retirement income. This is linked to the previous point. Some retirees try to prop up income side of their portfolios by reducing exposure to high-quality fixed interest and broadly-diversified share funds to increase exposure to higher-risk, higher-yield bonds and a more-concentrated selection of high-dividend shares.

But by moving away from appropriately-diversified portfolios, such investors may have difficulty in meeting their long-term investment goals given the greater risks involved.

Interesting, recent CSRIO research on superannuation drawdown behaviour – from a team that includes behavioural economist Dr Andrew Reeson – confirms that many retirees in their 60s and 70s draw down on their account-based pensions at modest rates. Often only the minimum pension is taken.

Perhaps it’s a matter of understanding your financial position as a retiree and seeking advice when appropriate.

While some retirees have difficulty stretching their retirement savings far enough, others may be unnecessarily frugal as the CSRIO research suggests.


Robin Bowerman
04 October 2016


Any advice contained in this website is of a general nature only and does not take into account your circumstances or needs. You must decide if this information is suitable to your personal situation or seek advice.

Rolanda has been my financial adviser for 20 years. I have always found her to be highly intelligent, knowledgeable and professional in her career. Rolanda is accessible at all times and patiently explains terms that I do not fully understand. I can highly recommend Rolanda and it is a pleasure to do so. I do this with the utmost confidence. Marcia Montgomery (Retiree – home duties and ex-clerk with Water Board)
I retired Oct 2012, and seeking Financial Advice for my retirement funds, I decided to have Rolanda look after my financial affairs, and so happy I did. Since my retirement I am extremely comfortable with Rolanda’s advice, experience and strategies and the returns on my investments. Rolanda is my "Breath of Fresh Air" at this stage of my life and she makes herself available 24/7 should you need to talk with her. Steve Hoad (Ground Engineer, Qantas)
In 1997 I left Energy Australia and decided to join Rolanda Adams Financial Services for the financial support and advice that I would need into the future. That decision has proved a very good one and I am still with Rolanda who has given me advice and friendship over those many years. The advice given has ensured that my investments have been protected and the major losses, of some, during the GFC was not felt by me unduly. Rolanda and her team are very easy to contact at any time and one is always received in a most professional manner. I would be most happy to recommend Rolanda Adams Financial Services to all who need financial services. Graham Fleeton (Manager, Property Insurance Group Energy Australia (Ausgrid))
Rolanda has been my Adviser for the past 18 years. Through her wide industry experience and professional expertise she has ensured the sound development and ongoing management of my investments. Her advice has invariably been sound, timely and entirely tuned to meet my personal needs in retirement. She has a friendly, engaging manner and is always readily available to address any of my concerns. I have no hesitation in recommending her. Neil O'Keeffe (Chief Inspector (retired), Australian Customs Service)

© 2021 Rolanda Adams Financial Services Pty Ltd. All rights reserved. Site by PlannerWeb.