Meeting cash flow needs in retirement

Meeting cash flow needs in retirement


Working out the right cash management strategy for a self-managed super fund (SMSF) is a critical component of its success.

Retirees usually spend more in the first few years of retirement because they are doing all the things that they couldn’t while they were still working. Therefore, a smart way to determine cash flow needs is to run a budget for 12 months.

One way to organise a budget is to break it down to fixed and discretionary expenses to build an investment strategy that will produce the desired level of cash. Once trustees know how much cash their fund needs to generate, the next stage is to apportion the capital appropriately within the portfolio.

It may be a good idea for trustees to have at least 12 months in income payments held in defensive assets like cash and term deposits as a buffer.

As most people will need to have sufficient income for 30 years after they stop working, an allocation to growth assets is essential to ensure the money won’t run out before the members die. Growth assets need to have reliable, sustainable income to help top up the cash account.

As life can be unpredictable, trustees and retirees need a portfolio that can respond to life events, and has the liquidity to fund lifestyle and pension payments.

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If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.


Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.


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