Retirement planning is not just about arithmetic. It involves longevity risk, investment volatility, tax efficiency, and withdrawal strategy.
Australians are living longer than ever. If you retire at 60 and live to 90, your super needs to fund 30 years of income. Even retiring at 65 could mean supporting yourself for 25 to 30 years. Many people underestimate how long retirement will last, which is one of the biggest risks in planning. Running out of money at 85 is not a theoretical issue — it is a very real possibility if planning is done poorly.
One of the most misunderstood risks in retirement is something called “sequence of returns risk.” When you are working and contributing to super, market downturns are uncomfortable but manageable. You continue adding money, and markets generally recover over time. However, in retirement, you are withdrawing funds instead of contributing. If markets fall significantly in the first few years after you retire, you are drawing income from a reduced balance. Even if markets recover later, the damage may be permanent because your capital base has shrunk.
At the same time, being overly conservative presents its own danger. Many retirees shift heavily into cash or term deposits to avoid volatility. While this may feel safe in the short term, inflation steadily erodes purchasing power. Over a 25–30 year retirement, even modest inflation can significantly reduce the real value of your income. A portfolio that does not grow is, in effect, going backwards.
This is why retirement investing requires a balanced and structured approach. The objective is not to chase the highest possible returns, nor is it to eliminate all risk. Instead, the focus should be on creating stability for income needs while maintaining sufficient growth to outpace inflation. This often involves maintaining a diversified allocation across defensive and growth assets, combined with a disciplined withdrawal strategy.
Another critical factor is taxation. Superannuation in pension phase can be tax-free on earnings up to the Transfer Balance Cap. However, amounts above that cap remain taxed in accumulation phase. Investments held outside super may be taxed at marginal tax rates of up to 47%. Structuring assets appropriately can significantly extend how long your super lasts.
Ultimately, there is no universal answer to how long super will last. The outcome depends on retirement age, annual spending requirements, asset allocation, tax positioning, fees, and market returns. What matters most is modelling different scenarios and stress-testing the plan against potential downturns.
Retirement should provide peace of mind, not uncertainty. With careful structuring and ongoing review, your super can be positioned to support you throughout your lifetime — and potentially leave a legacy for the next generation.
Disclaimer: This information is general in nature and does not consider your personal objectives, financial situation or needs. You should consider seeking professional advice before making any financial decisions. Past performance is not a reliable indicator of future performance.
