Imagine you inherit a dairy farm with 50 healthy cows.

Each cow produces milk that you can sell for income. Together, they generate enough money to live on comfortably.

Now imagine someone suggests: “Why don’t you sell five cows this year to buy a new truck?”

Sure, you’d get the truck. But now you only have 45 cows. Your milk production – your income – just dropped 10%. Forever.

Next year, you sell another five cows to fund a holiday. Now you’re down to 40 cows. Income drops another 10%.

Keep going like this, and eventually you’ll have no cows left. No income. Just memories of nice things you bought by destroying your income-producing herd.

That’s exactly what happens when retirees sell their super investments to fund lifestyle expenses.

As a Balmain financial planner, I see this mistake constantly. People with $700,000 in super think: “I’ll just sell $50,000 of shares to renovate the kitchen.”

They get their kitchen. But they’ve permanently reduced their retirement income by $3,000-$4,000 per year. For the rest of their lives.

Let me show you why your investment “cows” should never be sold in retirement – and what you should do instead.

The Core Principle: Never Kill Your Income-Producing Assets

Here’s the fundamental rule of sustainable retirement:

Live off the income your investments generate. Never sell the investments themselves.

It’s the difference between:

• Eating the eggs your chickens lay (sustainable)
• Eating the chickens (one-time gain, permanent loss)

Your retirement super should be structured to generate ongoing income through:

• Dividends from shares
• Distributions from property trusts
• Interest from bonds
• Payments from infrastructure investments

These payments come to you regularly – quarterly, semi-annually – without you selling anything.

That income can fund your retirement lifestyle year after year, decade after decade.

“Your Retirement Income Isn’t What You Think”

What Happens When You Start Selling “Cows”

Let me show you the real cost of selling investments in retirement.

Scenario: John and Marie’s $60,000 Mistake

John and Marie, both 64, living in Balmain with $650,000 in super structured to generate 5.5% annual income ($35,750/year).

Combined with their part Age Pension ($18,000), they have $53,750 annual retirement income. Comfortable.

Their son asks for help with a house deposit. They decide to “help the kids” by selling $60,000 worth of shares from their super.

Generous? Yes. Smart? Let’s see.

Immediate impact:

• Super balance: Now $590,000 (down from $650,000)
• Annual income from super: Now $32,450 (down from $35,750)

They’ve permanently reduced their income by $3,300 per year.

Long-term cost:

• Over 25 years of retirement: $82,500 in lost income
• If those dividends had been reinvested: $120,000+ in lost wealth

They gave their son $60,000. It actually cost them $120,000+ in lifetime retirement security.

That’s the hidden cost of selling your “cows.”

The Compounding Damage of Serial Selling

It gets worse when people make this mistake repeatedly.

Year 1: Sell $40,000 for renovations

Starting balance: $700,000

Annual income at 5%: $35,000

After selling: $660,000 remaining

New annual income: $33,000

Year 3: Sell $30,000 for a holiday

Balance: $660,000 (roughly, accounting for some growth)

After selling: $630,000

New annual income: $31,500

Year 5: Sell $25,000 to help daughter

Balance: $630,000

After selling: $605,000

New annual income: $30,250

In five years, you’ve sold $95,000 from super. Your annual income has dropped from $35,000 to $30,250 – a 14% reduction.

Keep this up for 15 years, and you’ll have no income-producing assets left. Just a diminishing pool of capital you’re desperately trying to make last.

Real Income vs Selling Assets: The Math That Matters

Let’s compare two approaches over 20 years of retirement.

Approach 1: Keep the Herd, Live Off Income

Starting balance: $650,000

Strategy: Draw only the income generated (5.5% = $35,750/year), never touch capital

Year 10:

• Balance (with dividend growth): ~$720,000
• Annual income: ~$39,600

Year 20:

• Balance: ~$800,000
• Annual income: ~$44,000

Your income has grown. Your capital has grown. You still have your herd.

Approach 2: Sell Assets to Fund Lifestyle

Starting balance: $650,000

Strategy: Sell $50,000 worth of assets annually to fund retirement

Year 10:

• Balance: ~$220,000 (accounting for some growth before selling)
• Annual income from remaining assets: ~$12,000
• Now heavily dependent on Age Pension

Year 15:

• Balance: Essentially $0
• Living entirely on Age Pension

One approach leaves you wealthy at 85. The other leaves you broke at 75.

“Income for Life vs Capital Gains”

But What If I Really Need to Spend More Than My Income?

Sometimes life requires spending beyond your regular income. Medical emergency. Helping family. Unexpected home repairs.

Here’s the hierarchy of how to handle it:

1. First: Use Your Cash Buffer

Every retiree should have 12-24 months of living expenses in cash/term deposits. This covers unexpected needs without touching your investment herd.

2. Second: Delay Non-Essential Spending

That European trip can wait a year. Renovations can be staged. New car can be delayed.

Give your income time to accumulate rather than selling assets.

3. Third: Reduce Ongoing Expenses Temporarily

If you need a lump sum, spend less on other things for 6-12 months. Build up cash from your income. Then spend it.

4. Last Resort: Sell Strategically

If you absolutely must sell investments, do it strategically:

• Sell your lowest-yielding assets first (keep the highest income producers)
• Sell when markets are up, never in a panic during a crash
• Understand you’re permanently reducing future income
• Make it rare, not routine

The Philosophy: Keep the Herd, Milk the Income

Think of your super as a herd of income-producing assets.

Each investment is like a cow that regularly produces milk (dividends, distributions, interest).

Your job in retirement: Keep the herd healthy and intact while living off what they produce.

Never eat the cows.

This philosophy completely changes how you think about retirement:

• Instead of “How long until I run out?” → “How much income does my herd produce?”
• Instead of watching your balance shrink → Watch your income grow
• Instead of stress about market crashes → Confidence that income keeps flowing

What This Means for Balmain Pre-Retirees

If you’re approaching retirement:

Before You Retire:

Structure your super to maximize sustainable income. Shift from growth-focused to income-focused investments.

Goal: By retirement, your super should generate 4.5-5.5% annual income through dividends and distributions.

In Early Retirement (60-70):

Live strictly within the income your investments generate plus Age Pension. Build cash buffers when income exceeds spending.

Never touch capital for routine expenses or lifestyle spending.

In Later Retirement (70+):

If your spending naturally decreases (as research shows it does), bank the excess income or gift it to family from cash flow – not by selling assets.

The Emotional Benefit: Peace of Mind

Here’s what happens when you commit to never selling your investment herd:

You stop obsessing over your super balance

When your balance fluctuates (and it will), you don’t panic. You’re not planning to sell anyway, so the daily value doesn’t matter.

You stop fearing market crashes

Your income keeps flowing even when markets drop. You never have to sell at the bottom.

You stop asking “Will it last?”

When you’re living off sustainable income rather than depleting capital, you know it will last. Your herd will keep producing.

Common Objections (And Why They’re Wrong)

“But then I’ll die with too much money!”

Maybe. But isn’t that better than running out at 80 and spending 15 years broke?

Plus, if you end up with “too much,” you can always gift income to family during your lifetime or leave a meaningful inheritance.

“What if I need a lump sum for aged care?”

This is where your home equity comes in. Balmain properties provide enormous flexibility for aged care funding without touching your income-producing super.

“Isn’t this too conservative?”

Conservative is living in fear that you’ll run out of money.

This approach is confident: knowing your income will last your lifetime because you’re not depleting your capital.

The Bottom Line

Your investment “cows” should never be sold in retirement.

They’re not a pile of money to spend down. They’re income-producing assets to keep and maintain.

Every time you sell an asset, you permanently reduce your future income. Do it enough times, and you’ll run out of income long before you run out of life.

Instead: Keep your herd intact. Live off what it produces. Watch both your income and your capital grow over time.

That’s the secret to a comfortable, sustainable, stress-free retirement.

Ready to Build Your Income-Producing Herd?

Stop selling your future. Start building sustainable retirement income.

Get your One Page Financial Plan showing exactly how to structure your super for lifetime income.

For $660 (inc GST), you’ll discover:

✓ How much income your current super can sustainably generate

✓ Whether you need to shift your investment strategy (and how)

✓ Your cash buffer requirements for unexpected expenses

✓ 100% satisfaction guaranteed

One Page Financial Plan

📧 Email: adam@suncow.com.au

📞 Phone: 0418 785 200