Amanda Hardy Lai, Author at Retirement Essentials

Mixing lump sums with income: Balancing flexibility, timing and risk

Martin, 68, recently retired and is considering withdrawing a $70,000 lump sum from his superannuation to purchase a new car, embark on a long-awaited holiday, and keep some funds in reserve. However, with recent market fluctuations, he’s concerned about the timing and potential long-term impact on his retirement savings.

Understanding the implications of lump sum withdrawals

When retirees such as Martin consider lump sum withdrawals, it’s good to know how these differ from regular income stream payments when taken from an Account-Based Pension (ABP). Notably, lump sum withdrawals from an ABP:

Do not count towards the minimum annual drawdown requirements set by the government for ABPs. For instance, individuals aged 65–74 are required to withdraw at least 5% of their account balance annually.

Can affect the longevity of retirement savings, particularly if taken during market downturns, potentially locking in losses.

The role of market volatility

Market conditions play a significant role in the decision to withdraw lump sums. With recent market dips, selling investments to fund a lump sum withdrawal could mean realising losses that might have been recovered over time. This scenario underscores the importance of sequencing risk—the danger of withdrawing funds during market lows, which can adversely affect the long term sustainability of retirement savings.

Retirement, legacy, and the Bank of Mum and Dad

by Amanda Hardy Lai | Retirement Spending

Navigating the complexities of retirement planning and intergenerational wealth transfer is increasingly important for Australian families. As the ‘Bank of Mum and Dad’ (BoMaD) plays a more prominent role in assisting younger generations, understanding the implications for both retirees and their heirs becomes essential.

Intergenerational wealth transition

Australia is on the cusp of its largest wealth transfer in history, with an estimated $3.5 trillion expected to pass from Baby Boomers to younger generations over the next two decades (Productivity Commission, 2021). However, studies suggest that without proper planning, a significant portion of this wealth may be lost by the second generation, and even more by the third. Implementing clear succession plans and fostering open family discussions about wealth management can help preserve and effectively transfer assets.

Managing superannuation for retirement and legacy

Superannuation is primarily designed to provide income in retirement, but it can also play a role in estate planning. Retirees can use strategies such as Account-Based Pensions to generate a steady income while managing their remaining super for future beneficiaries. Staying informed about legislative changes and considering strategies such as Binding Death Benefit Nominations (BDBNs) can help ensure assets are distributed according to one’s wishes.

Generational spending habits in retirement

Spending patterns in retirement vary notably across generations, influenced by differences in asset ownership and financial challenges. According to KPMG’s 2025 analysis, Generation X holds the highest average housing wealth at approximately $1.31 million, closely followed by Baby Boomers with $1.30 million. In contrast, Millennials and Generation Z have significantly lower average housing wealth, at $750,000 and $69,000 respectively, highlighting the substantial hurdles younger generations face in entering the property market. Understanding these differences is key to developing financial plans that accommodate varying needs and expectations.

Running the numbers: The comfort of knowing you’ll be okay

by Amanda Hardy Lai | Retirement Spending

“My husband is 74, and I’m 68. We own our home and have around $400,000 in super. We receive the full Age Pension and live off that for our regular bills. When something comes up — car repairs, holidays — we take money out of super. This amounts to about $20,000 a year. Are we going to be okay?”

That’s the question Judy asked. And it’s one we hear often.

Because it’s not always easy to know. There’s no single number that tells you everything’s fine. Retirement is full of moving parts — the Age Pension, super drawdowns, rising living costs, unexpected expenses — and even when things feel like they’re going well, many people wonder if they’re missing something.

So we helped Judy to find out.

Running the numbers

Together, she and her husband Andy had $400,000 in Account-Based Pensions (ABPs). Their Age Pension entitlement was $45,037 a year — the full rate for a couple who own their home. On top of that, they were drawing about $20,000 from super each year — bringing their total income in retirement to around $65,000 annually.

Using the Retirement Essentials retirement forecasting tool, we looked at how things might unfold. If they continue to spend at that level, our projections show they’re likely to be okay — all the way through their later years. By the time Judy turns 95 — and her husband reaches an impressive 101 — they’re still expected to have around $38,000 remaining in super and investments.

In short? Things look reassuring.

But we didn’t stop there.