John and Suzie: Securing Peace of Mind in Retirement Through Downsizing

John and Suzie, both in their late 60s and enjoying retirement, were increasingly anxious about their financial future. With a combined super balance of $650,000 and drawing an $80,000 annual income, they worried that their savings would run out far too soon. They didn’t want to rely on the age pension, as it wouldn’t sustain their lifestyle, and were concerned about eroding their capital while still hoping to remain close to their children.

• Financial Longevity: Will we have enough to last through our retirement without depleting our savings?
• Family Proximity: Can we stay close to family while finding a way to free up more retirement funds?
• Lifestyle Maintenance: We don’t want to compromise on the quality of life we’ve worked hard for.
• Avoiding Reliance on Government Support: How can we stay independent and avoid relying on the age pension alone?

Understanding that John and Suzie wanted to balance financial security with their personal lifestyle goals, we focused on a downsizing strategy that would give them the freedom to enjoy retirement without financial stress.

After thoroughly discussing their priorities, they sold their family home for $1.4 million, freeing up much-needed funds. They fulfilled their dream of living near the beach by purchasing a charming seaside home for $900,000, leaving them with $500,000 in cash.

Wanting to ensure they made the most of this opportunity, we guided them through the process of contributing $250,000 each into their super funds using the downsizer scheme. With this boost to their super, we converted their accounts into tax-free pension accounts, increasing their combined super balance to $1.15 million. Their newly structured investment portfolio was carefully designed to generate an estimated 7% return, allowing them to draw $80,500 annually—slightly more than their previous income—with no erosion of their capital.

We also introduced a long-term strategy that aligned their spending with the realities of aging. By spending a little more in the earlier years of their retirement, when they were still active and enjoying travel, and gradually tapering their spending after the age of 75, they could maintain their desired lifestyle while feeling confident about their financial future.

Finally, we built in flexibility: should they need additional capital in the future, they could downsize again to an apartment, unlocking further funds for their later years.

• Financial Security: Their $1.15 million super generates sufficient income, ensuring
  they won’t outlive their savings.
•  Lifestyle Freedom: John and Suzie can live by the beach near family, with flexibility
  to downsize again if needed.
• Tax Efficiency: Their retirement capital is housed in tax-free pension accounts.
•  Reduced Worry: Professional investment management means they can focus on
  enjoying life rather than financial stress.