Building Clarity for Retirement

Building Clarity for Retirement

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Introduction

Planning for retirement isn’t just about building up a nest egg—it’s about knowing how to turn that money into reliable income for the lifestyle you want. For many Australians, the question isn’t just “Do we have enough?” but “How do we actually make it last?”

At Coastal Capital Advice, our role is to replace uncertainty with clarity. We help clients understand what their money can do, how to manage cashflow year by year, and how to balance today’s lifestyle with tomorrow’s security.

The Challenge

John and Karen, a couple from the Illawarra in their late 50s, came to us with $1.25 million combined in superannuation and a clear goal: retire at 60.

They were excited about this new stage of life but overwhelmed by questions:

• How much could they safely spend each year without running out?
• Could they fund the big overseas trips they dreamed of in their 60s while still protecting their future?
• Should they leave money in super, start pensions, or keep part of their funds in cash?
• How would they manage irregular expenses like replacing a car or helping their adult children?

They weren’t looking for a bigger balance. They were looking for confidence in cashflow and ensuring their assets would last.

Our Approach

We started by clarifying their goals: retire at 60, travel heavily in the first 10–12 years, and then settle into a simpler, more local lifestyle in later retirement.

1. Superannuation strategy
   • Used their working years to accelerate wealth accumuation into superannuation through both concessional and non-concessional contributions.
   • Upon attaining age 60 and retireing, converted their accumulation accounts into account-based pensions to generate tax-free income.
2. Cashflow modelling
   • Created a two-phase income plan:
     • Phase 1 (60–72): Higher spending, including travel budget for international trips.
     • Phase 2 (73+): Reduced spending reflecting a more home-based lifestyle.
   • Factored in lump-sum needs such as car upgrades, home maintenance, and medical costs.
3. Investment design
   • Set up a “bucket strategy” with three layers:
     • Cash bucket for 2–3 years of living expenses (to avoid selling investments in market downturns).
     • Income bucket of defensive assets generating regular distributions.
     • Growth bucket for long-term capital growth to support later years.
4. Scenario planning
   • Tested outcomes under different assumptions: market downturns, higher inflation, or living 5 years longer than expected.
   • Built flexibility so they could increase travel, if they desired, without jeopardising the plan.

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The Result

For the first time, John and Karen could see their retirement in numbers and pictures:

• Retiring at 60 was sustainable with their respective super balances.
• They could comfortably enjoy the desired travel.
• Even after funding these higher early expenses, their plan showed strong confidence of maintaining income well into their 90s.
• Their “bucket strategy” meant they would always have cash set aside for near-term spending, reducing anxiety about market swings.

Instead of worrying about whether they might overspend, they now have a roadmap for cashflow that balances today’s enjoyment with tomorrow’s security.

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The Takeaway

Retirement isn’t just about reaching a number in your super. It’s about turning assets into a reliable, flexible income stream that adapts as life changes.

The complexities of managing cashflow—knowing when to draw from pensions, how much to keep in cash, and how to fund both regular and irregular expenses—can feel daunting. But with the right advice, these decisions become clear.

If you’re approaching retirement and wondering how to confidently manage your income, you don’t need to rely on guesswork.

Book a conversation with Coastal Capital Advice and take the first step toward a retirement plan that funds your lifestyle, not just your survival.

General Advice Disclaimer: The information provided in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Before acting on any information, you should consider whether it is appropriate for your circumstances and seek personalised advice. Past performance is not a reliable indicator of future performance.