Nigel and Francesca: Achieving a $300,000 Annual Retirement Income for a High- Earning Surgeon

Nigel, a successful surgeon, and his wife Francesca, who does not work, are approaching retirement in about three years. Their financial landscape includes eight investment properties with considerable equity but facing challenges due to debt levels, poor returns and time spent managing said properties. With significant insurance expenses totalling $60,000 annually, they are concerned about achieving a sustainable $25,000 monthly income. The complexity of their tax structures and substantial debt add to their financial worries.

• Retirement Income: How to generate $300,000 per year in retirement from their assets.
• Property Portfolio Management: Effectively managing/divesting a concentrated property portfolio with substantial debt and low returns.
• Tax Efficiency: Navigating complex tax implications and optimizing the sale of properties.
• Insurance Costs: Reducing high insurance expenses without compromising their financial security.

1. Strategic Property Liquidation:
   • Planned Sell-Down: Developed a phased sell-down strategy to minimize tax impacts and optimize liquidity. Prioritized the sale of poor-performing properties and scheduled the sale of high capital gains tax (CGT) properties during retirement, capitalizing on lower taxable income.
2. Capital Reallocation and Debt Reduction:
   • Debt Management: Utilized proceeds from property sales to significantly reduce existing debt, improving overall financial stability.
   • Income Generation: Reallocated liquidated capital to generate a stable retirement income, addressing the need for $25,000 monthly withdrawals.
3. Superannuation Optimization:
   • Maximizing Contributions: Implemented non-concessional contributions (NCCs) and leveraged the downsizer contribution strategy to boost Nigel’s Self-Managed Super Fund (SMSF), given their long-term ownership of a qualifying property.
   • Concessional Contributions: Increased concessional contributions, including catch-up contributions to fully utilize previous years’ unused caps, enhancing superannuation growth and tax efficiency.
4. Diversified Investment Strategy:
   • Customized Advice: Provided tailored investment advice across multiple structures, including SMSF, trusts, and companies, to optimize returns and manage risks.
   • Enhanced Diversification: Transitioned to a diversified investment portfolio, focusing on high-growth assets to improve liquidity and long-term performance.
5. Insurance and Cost Management:
   • Insurance Review: Eliminated unnecessary insurance costs, freeing up $60,000 annually, considering their robust financial position and absence of dependants.
6. Retirement Income Planning:
   • Allocated Pensions: Developed a strategy for implementing allocated pensions at retirement to ensure a reliable and consistent income stream.

• Achieved Income Targets: Met the $300,000 annual retirement income goal with a well-structured plan.
• Significant Superannuation Growth: Nearly double superannuation value in seven years through strategic contributions and effective management.
• Tax Efficiency: Reduced tax liabilities with a strategic approach to property sales, resulting in substantial savings.
• Improved Liquidity and Diversification: Enhanced financial flexibility with a diversified investment portfolio, reducing dependency on property assets.
• Cost Savings: Achieved significant cost savings by eliminating high insurance expenses, contributing to overall financial health.