Asset planning for retirees

Asset planning for retirees


Planning how you should spend your assets in retirement is rarely an easy task. For most self-funded retirees, your living expenses will come from your superannuation account, investment income, selling investment capital, downsizing the family home to release funds, and in some cases, part-pensions from government sources.


All of these sources need to be managed individually. Where the task becomes increasingly difficult is taking into account liabilities such as capital-gains tax, anticipated life expectancy, to what extent you want to leave an inheritance, and what ‘margin of error’ should you consider if you live longer than anticipated.

The first step in planning for retirement is nominating how much you think you will require as living expenses over the Retirement Phase of your life.  Will there be any large, one-off expenses – for example special occasions such as buying a new car or painting the house? Next, is establishing if you need to downsize the family home or sell investment properties so that you can sufficient investments to provide you with your desired income.

How does Financial Mappers help you do this?

For each asset such as a cash account, share portfolio or managed fund, you will be asked to nominate when you want to draw down that asset and for how long you want it to last.  That is you can customise the drawdown of every asset rather than work on averages.

Hidden behind the simple interface is a complex formula that calculates your anticipated future income and the inflationary effect on the value of your income.  The aim is to try to draw down the funds from each account in fairly even amounts.  While not an exact science (no one can ever predict the future) and the formula returns the best estimate based on a pre-selected average return and inflation rate.

Financial Mappers makes these calculations easy to make and simple to interpret.

Most people will have a substantial portion of their retirement funds in superannuation.  For this reason Financial Mappers gives the retiree a choice of three methods to calculate their drawdown of superannuation:

How long you want funds to last

The first method is the same applied to all accounts those Australians who haveSelf-Managed Super Funds (SMSF) where the retiree nominates ‘how long you want your funds to last’.  Start by nominating the year you want to start drawing down for each asset and for how long you want the funds in that account to last. Experiment with different scenarios to find a plan that suits your desired lifestyle.


The second method is the classic method of nominating the drawdown amount as a percentage of funds.  Financial Mappers gives you the opportunity to experiment with different percentages before making decisions. And importantly, the program takes into account any government rules on minimum and maximum drawdown values.


The final method of drawdown is to purchase an annuity at the start of your retirement. When purchasing annuities, your provider will use their own formula, but Financial Mappers allows you to enter your costs manually. One major feature is to calculate the value of future payments where you have elected to purchase an annuity that is either inflation-linked or rises at a fixed percentage each year.

Financial Mappers gives you the power to create, modify and test your financial plans. The Wealth Guidance Report is a comprehensive report that maps out your finances, your goals, and your financial plans. Use this report, and many more, either independently or with your financial advisor to develop a strategic plan for your future.


Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.

I am a founding board member of Plencore Wealth Ltd and Plencore Online Pty Ltd. I am the designer of the product Financial Mappers and Financial Mappers PRO, cloud based modelling software for Personal Finance. This software is sold on the web site am an educator, investor and expert in both personal finance and mathematical modelling and the author of 'Map Your Finances'.I have both a Graduate Diploma in Applied Finance and Investments and a Diploma in Financial Advising from the Securities Institute of Australia. I also have a Financial Analysis Certificate, by Distance Learning from University of Technology, Sydney. I am a Senior Fellow and Senior Mentor of FINSIA.
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