Why Most Australians Have the Wrong Retirement Strategy

Picture this:

You’re 58. You’ve been diligently saving into super for 30 years. Your balance has grown to $680,000. Not bad.

But every time you look at that number, you feel… anxious. Uncertain. Like you’re missing something.

You check your balance obsessively. When it’s up, you feel relief. When it’s down, you panic. You wonder: “Is this enough? Should I work another five years? What if there’s another market crash?”

Here’s what nobody’s telling you: The problem isn’t your super balance. The problem is you’ve been taught to think about retirement completely backwards.

And this backwards thinking is costing Australians years of unnecessary work and decades of unnecessary anxiety.

The Traditional Retirement Strategy (That’s Keeping You Awake at Night)

Here’s the retirement advice you’ve been hearing your entire working life:

Build up a massive pile of money

Save everything you can. Maximize your super contributions. Chase growth. Buy and sell investments to “maximize returns.” Build that balance as high as possible.

Then sell it down slowly in retirement

Once you retire, start selling your investments bit by bit. Need $60,000 this year? Sell $60,000 worth of assets. Next year? Sell another $60,000. And so on until… well, until you run out or die. Whichever comes first.

Cross your fingers and hope it lasts

Watch your balance shrink every year. Pray there’s no major market crash. Hope you don’t live “too long.” Stress about every expense. Welcome to the Fear Of Running Out – or FORO, as I call it.

Sound familiar?

This is the standard retirement strategy that financial institutions, super funds, and well-meaning advisers have been selling for decades.

There’s just one problem: It’s terrifying. And it doesn’t have to be this way.

Why the Traditional Approach Fails You

The traditional “build it up, sell it down” retirement strategy has three fatal flaws:

Flaw #1: Your retirement depends entirely on market timing

Imagine you retire in December 2007 with $800,000. You’re feeling pretty good. Then the GFC hits in 2008 and your balance crashes to $500,000.

But you still need to live. So you’re forced to sell assets at depressed prices – selling $60,000 worth of investments that were worth $100,000 just months earlier. You’re locking in losses just to pay for groceries.

Your retirement timeline just got dramatically shorter. Not because you did anything wrong. Because you retired at the wrong time.

How is that a strategy?

Flaw #2: You’re guaranteed to watch your wealth disappear

Under the traditional approach, your retirement is one long countdown. Every year, your balance gets smaller. Every purchase feels like you’re spending your future.

Start with $700,000. Five years later: $600,000. Ten years: $480,000. Fifteen years: $340,000.

You’re meant to relax and enjoy these years. Instead, you’re watching your safety net shrink month after month, wondering when it’ll run out.

The psychological toll is enormous.

Flaw #3: It forces you to become a trader in retirement

Here’s something bizarre: The traditional approach requires you to constantly buy and sell assets throughout retirement.

Need $5,000 this month? Better sell something. Market’s down 20%? Too bad – you still need to eat, so you’re selling at a loss. Market’s up? Great, but you’re also selling winners and triggering capital gains tax.

As I tell my Balmain clients: Money is like soap – the more you handle it, the less you have. Every trade costs you in fees, spreads, tax, and timing mistakes.

You spent 40 years building wealth. Why would you spend your retirement slowly dismantling it?

The Better Way to Think About Retirement

What if there was a completely different approach?

Instead of obsessing over your total super balance (a number that terrifies you), what if you focused on something else entirely: How much reliable income your assets can generate each year?

This simple shift in thinking changes everything.

“Your Retirement Number Isn’t What You Think”

Here’s the fundamental truth: You can’t spend your super balance at Coles. You can’t pay your electricity bill with your share portfolio value. You can’t take your grandkids to Luna Park with your house equity.

What you need is income. Regular, reliable, sufficient income that keeps coming whether markets go up or down.

This is what I call the income-focused approach to retirement. And it’s the exact opposite of what most Australians have been taught.

A Quick Preview: The 2 Cows Strategy

I grew up wanting to be a farmer like my parents and grandparents. That didn’t happen – I became a stockbroker instead. But farming taught me something crucial about building wealth.

Think of a farmer with two types of cows:

Dairy cows: These produce milk every single day. Regular, reliable income. The farmer never sells them – they’re too valuable. He keeps them forever and lives off the milk they produce.

Beef cattle: These don’t produce anything until you sell them for meat. They might be worth more in a few years, but they give you nothing in the meantime. And once you sell them? They’re gone forever.

Most Australians build retirement portfolios full of “beef cattle” – assets that only have value when you sell them. Growth stocks. Investment properties you plan to sell. Super balanced in growth funds.

Then they wonder why retirement feels so stressful. They’re constantly selling assets just to generate cash flow, watching their herd shrink year after year.

The smarter approach? Build a herd of “dairy cows” – income-producing assets like dividend shares, income-focused managed funds, and investment properties you keep (and rent out) forever.

Keep the cows. Milk them forever. Never sell.

This is the foundation of the 2 Cows Strategy – a complete rethink of how retirement actually works.

[INTERNAL LINK: Link to Q2 Cornerstone “The 2 Cows Strategy” when published]

What This Means for You

If you’ve been following the traditional retirement strategy, you’ve probably experienced:

• Constant anxiety about your super balance
• Panic every time markets drop
• Confusion about whether you have “enough”
• Fear of retiring “too early” or living “too long”
• Obsessive spreadsheet checking and calculator use

This isn’t your fault. You’ve been taught the wrong strategy.

The good news? Once you shift to an income-focused approach, everything changes:

• You stop obsessing over your total balance and start focusing on annual income
• Market volatility becomes irrelevant – your income keeps flowing
• You know exactly what you can afford to spend each year
• Your assets stay intact (or even grow) throughout retirement
• FORO disappears because you’re not watching your wealth drain away

“How to Calculate Your Real Retirement Income”

The Questions You Should Be Asking

Instead of asking:

• “Do I have enough saved?”
• “What’s my super balance worth?”
• “How long will $700,000 last?”

Start asking:

• “How much annual income do I need?”
• “How much reliable income can my assets generate?”
• “Am I building dairy cows or beef cattle?”

These questions lead to completely different answers – and a completely different retirement experience.

Real Example: Two Balmain Couples, Two Strategies

Couple A: Traditional Strategy

$800,000 in super, invested in a balanced growth fund. They retire and start selling down $60,000 worth of assets each year to live on.

Year 1: Market drops 15%. Their balance falls to $680,000, but they still need $60,000 to live. They’re forced to sell at depressed prices.

Year 5: Balance is now $620,000 (after draws and market volatility). They’re stressed, second-guessing every expense.

Year 15: Balance down to $380,000. They can see the end approaching. Travel plans cancelled. Living like misers despite having hundreds of thousands left.

Couple B: Income-Focused Strategy

Same $800,000, but invested in income-producing assets generating $48,000/year in dividends and distributions. Combined with Age Pension ($18,000/year part pension), they have $66,000 annual income.

Year 1: Market drops 15%. Their balance falls to $680,000, but their income barely changes. Dividends still flow. They don’t need to sell anything.

Year 5: Market has recovered. Balance back to $820,000. Income has grown to $52,000/year through dividend increases.

Year 15: Balance now $920,000 (they never sold anything). Income now $58,000/year. They’re traveling, helping their grandkids, and sleeping soundly.

Same starting point. Completely different outcomes. The difference? Strategy.

Ready to Rethink Your Retirement Strategy?

If you’ve been following the traditional “build it up, sell it down” approach, you don’t have to keep living with FORO.

There’s a better way – one that focuses on generating reliable income instead of slowly draining your wealth.

Want to know if your current strategy is setting you up for stress or confidence?

Get a One Page Financial Plan designed for your Balmain lifestyle.

For $660 (inc GST), you’ll discover:

✓ Whether your current strategy is income-focused or sale-focused (and why it matters)

✓ How much annual income your assets can reliably generate

✓ Whether you’re on track or what needs to change

✓ A clear roadmap for building retirement income that lasts

✓ 100% satisfaction guaranteed

One Page Financial Plan page

📧 Email: adam@suncow.com.au

📞 Phone: 0418 785 200