Income stream Factsheet

Structuring Income Streams in Retirement

February 2021

It’s one thing to ‘have enough’ super when you retire. However, given that retirement may last 20 or 30 years, you need to plan and maintain your Income Stream to keep your finances on track.

Setting a tiered strategy

One of the most important issues of retirement is ensuring you have a well-structured and sustainable retirement income strategy. A popular and effective strategy is to segment your income into tiers relating to specific retirement time periods.

I will use a three tier example with differing investment options to help you better understand the strategy. These options may differ from one person to another, depending on your appetite for investment risk and financial circumstances.

The first and most important investment tier is Cash.





This tier should hold enough money to cover income payments for three to five years depending on your investment risk profile. This ensures you have a stable fund to draw income from and provides a level of protection from fluctuations in investment markets.

The second tier should include a conservative or stable investment option.




These options hold a large proportion of fixed interest investments and 50 – 70% in defensive assets to reduce the risk in these options in comparison to more aggressive investment options. These options are designed to experience greater volatility than cash but lesser volatility than traditional growth assets such as Shares and Property.

The third tier consists of investments traditionally more risky and volatile such as AvSuper’s High Growth, Australian Shares, Growth, Balanced Growth, Diversified Index and International Shares options.

By maintaining some growth assets, you have the opportunity for good levels of capital growth. The added volatility is somewhat offset by managing income needs through the cash and conservative tiers. It also ensures you are not forced to draw down on growth assets whilst markets are falling.

These different tiers of investment need to be rebalanced over time to top up the cash or conservative options. Thus there is an important need for periodic reviews of the overall strategy and investment allocations.

Diagram showing a way to structure an income stream for short and long term benefits

This strategy provides some certainty for drawing a stable retirement income while also allowing some investment exposure that can provide strong capital growth over time. It also reduces volatility in your overall portfolio when compared to being invested solely in growth assets.

Please feel free to contact us if you would like to discuss this strategy.



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This information is of a general nature only and does not take into account your personal objectives, situation or needs. Before making a decision about AvSuper, you should consider your own requirements and the relevant Product Disclosure Statement (PDS). For a copy call us or visit the AvSuper website, AvSuper Pty Ltd (ABN 46 050 431 797, AFSL 239078) is the Trustee of the AvSuper Fund (ABN 84 421 446 069). FS3000.5 02.2021

Phone 1300 128 751 (Local call)