Why most retirement planning fails: A frank conversation about the retirement income puzzle
I'm going to share something that might be uncomfortable: most people approaching retirement have a portfolio, not a plan.
They have superannuation. Maybe some shares or an investment property. Perhaps savings in the offset account. They've accumulated wealth—sometimes substantial wealth.
But accumulation and retirement income generation are fundamentally different games.
Let me explain.
The Retirement Income Puzzle
Imagine you're 63. You've just finished your last day of work. You have $780,000 in superannuation, $150,000 in savings, and an investment property worth $650,000 with $180,000 remaining on the mortgage.
You're debt-free on your family home. You're healthy. You want to travel, stay active, and enjoy the retirement you've worked 40 years to reach.
Now answer this: How much can you safely spend next month?
If you can't answer with confidence, you have assets, not a plan.
Why Traditional Advice Fails
For decades, retirement planning followed a simple formula:
Accumulate as much super as possible
Retire at 65
Draw 4-5% per year
Hope it lasts
This model is breaking down for multiple reasons:
The Early Retirement Reality The average retirement age in Australia is now around 62-63, not 65. Health issues, workplace restructures, caring responsibilities—life happens. If you plan to work until 67 but retire at 61, you've lost 6 years of contributions and added 6 years of drawdowns. That's a 12-year swing in your planning assumption.
The Longevity Factor A healthy 65-year-old couple today has a 50% chance that one of them will live beyond 90. That's 25-30 years of retirement funding required. The old 4% rule was built for 30-year retirements, but it was designed when life expectancies were shorter and return expectations were higher.
The Tax Complexity Between preservation age and 67, you're in a complex tax environment. TTR pensions, untaxed elements, taxable components, tax-free components, contribution caps, transfer balance caps—it's a minefield that can cost you tens of thousands in unnecessary tax or lost opportunities.
The Sequence of Returns Risk If you retire into a market downturn and start drawing from your super, you can permanently impair your retirement funding. A 30% market drop in year one of retirement has a far greater impact than the same drop in year 15, even if the average returns over 20 years are identical.
The Complete Retirement Income System
Here's what actually works—what I call the Retirement Income Blueprint:
Phase 1: Income Mapping (Age 50-55)
This is where you define your retirement income need with specificity:
Your baseline expenses (non-negotiable costs)
Your lifestyle expenses (the life you want to live)
Your contingency requirements (buffer for unexpected)
Your legacy intentions (if relevant)
Most people skip this step. They use rules of thumb or guess. Then they're surprised when reality doesn't match expectations.
I had a client who insisted $65,000 per year would be "plenty." When we mapped his actual lifestyle—including his boat maintenance, his fishing trips, his weekly dinners out, and his commitment to helping his grandchildren—the real number was $89,000.
That's not lifestyle creep. That's reality.
Phase 2: Asset Optimisation (Age 55-60)
This is your window of maximum flexibility. You have:
Potentially 10-15 more years of contributions
Access to carry-forward concessional cap rules
Possible eligibility for downsizer contributions
Options for contribution splitting with a spouse
The ability to restructure asset location for tax efficiency
A 57-year-old couple came to me with $620,000 in super (husband) and $190,000 in super (wife), plus $280,000 in their offset account and a $100,000 share portfolio in joint names.
Their plan was to "just keep going as we are" until 65.
Through strategic restructuring over three years:
We used unused concessional caps for both
Rebalanced their super holdings through contribution splitting
Repositioned high-income-generating assets into super
Maintained appropriate liquidity outside super
Result: Their projected retirement income increased by approximately $11,400 per year, and they'll pay roughly $38,000 less in tax during their first decade of retirement.
Phase 3: Transition Strategy (Age 60-67)
This is the danger zone. You have access to super, but rushing in without strategy can be catastrophic.
Key considerations:
TTR pension vs full retirement
Sequencing your income sources for tax efficiency
Managing the transition balance cap
Coordinating Centrelink age (if relevant)
Recontribution strategies for tax optimization
I worked with a 62-year-old who took $120,000 from his super the day he turned 60 to "reward himself" with a new caravan and overseas trip. Emotionally satisfying. Financially devastating.
That $120,000, left invested in pension phase, would have generated approximately $6,000-$7,000 in tax-free income annually for the next 25+ years. He traded $150,000+ in lifetime income for immediate gratification.
Phase 4: Distribution Strategy (Age 67+)
Once you're in full retirement, your focus shifts to:
Sustainable drawdown rates
Dynamic spending strategies
Tax-effective income sequencing
Longevity risk management
Flexibility for changing circumstances
This isn't "set and forget." The best retirement income strategies adapt as markets, regulations, health, and personal circumstances change.
The Real Question
Here's what matters: Do you have a system that coordinates all these phases, or are you making it up as you go?
Most people over 50 are winging it. They're making decisions in isolation without understanding how each choice impacts their complete retirement picture.
They're maxing out contributions because "super is tax-effective" without considering liquidity needs.
They're keeping money outside super because "I might need it" without optimizing tax efficiency.
They're planning to work until 67 because "that's when you retire" without stress-testing earlier exit scenarios.
Your Retirement Deserves Better
You've spent 30-40 years building your career and accumulating wealth. Your retirement planning should be at least as sophisticated as your accumulation was.
That means:
Specific income targets, not guesses
Asset structure optimization, not default settings
Tax-effective strategies, not simple drawdowns
Stress-tested plans, not hopeful assumptions
If you're over 50 and you're not confident you have all four, we should talk.
This article provides general information only and does not consider your specific circumstances. Before making investment or financial decisions, consider speaking with a licensed financial adviser.