First published in The West Australian, 29 June 2026.
For many retirees, the biggest risk isn’t market volatility — it’s running out of money.
The rising cost of living has exposed a gap in many retirement strategies. What once felt comfortable is now under pressure, and more Australians are being forced to rethink how their retirement income actually works.
One of the biggest issues is longevity risk — the risk of outliving your money. As people live longer and costs continue to rise, this risk is becoming more relevant than ever.
In some cases, this has meant exploring strategies that people wouldn’t have previously considered.
For example, a reverse mortgage can be used to free up cash flow by accessing equity in the family home. This can provide additional income without needing to sell the property. However, it’s not without risk. The interest compounds over time, reducing the equity in the home and potentially impacting the legacy left to children.
That’s why strategies like this need to be carefully considered.
In other situations, I’ve seen clients take a very different approach — even selling their retirement village home.
In one case, a client in her late 70s made the decision to sell her unit because the ongoing costs were almost equivalent to renting in the same area. By selling, contributing part of the proceeds through downsizer contributions, and restructuring her investments, we were able to significantly improve her cash flow.
This included boosting her account-based pension and implementing a hybrid income strategy. By reducing her assessable assets, she was also able to increase her Centrelink entitlements. While she is now renting, she has far more income to live on — and importantly, she is no longer at risk of running out of money.
Of course, this approach comes with trade-offs. Future aged care costs need to be considered, and decisions like this must align with personal goals, family support, and lifestyle preferences.
More broadly, retirement income should not rely on a single source.
A combination of account-based pensions, lifetime income streams such as annuities, and hybrid strategies can work together to create a more stable and sustainable income. When structured properly, this can improve cash flow, provide greater certainty, and in some cases enhance Centrelink outcomes.
Retirement is not a “set and forget” strategy. As costs increase, income needs to be reviewed and, in many cases, incrementally adjusted to keep pace.
Interestingly, the problem isn’t always that people don’t have enough money.
In many situations, retirees actually have more than enough to sustain their lifestyle — but they’re too afraid to spend it.
There’s a deep fear of running out, particularly when retirees see their retirement savings being drawn down to fund their lifestyle.
That’s where ongoing advice becomes critical.
Through regular review meetings, we look at cash flow, spending patterns, and long-term projections. Forecasting tools can provide clarity on how long retirement savings are likely to last, based on different scenarios, which helps build confidence in spending decisions.
There is also a common misconception that once you retire, your investments should become highly conservative.
In reality, retirement can span 25 to 30 years or more. Many Australians are now living into their 90s. That means a significant portion of retirement savings still needs to be invested and generating returns.
As a general principle, only a relatively small portion of a portfolio is used to fund income each year, while the majority remains invested for long-term growth.
Being too conservative — holding large amounts in cash, term deposits or low-return assets — can actually increase the risk of running out of money over time.
Taking less risk can, in itself, be a risk.
Cost of living pressures are not new, but they feel more intense right now. Rising energy costs, higher food prices, and global uncertainty have all contributed to that pressure.
This is why planning matters.
For some, the solution may involve downsizing or restructuring assets. For others, it may mean adjusting income strategies or rethinking how wealth is held.
But at the core of all of this is one thing: cash flow.
If you understand your cash flow — what’s coming in, what’s going out, and how long it will last — you’re in control. Without that, you’re guessing.
And in retirement, guessing is not a strategy.