How to create an investment portfolio in retirement

In this guide

Putting the income horse before the investment cart
Factor in changing income needs
Plan for frailty
Different approaches to portfolio construction
An income-layering strategy
A bucket strategy
A fourth bucket
The bottom line

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Creating a retirement investment portfolio requires a different mindset to the investment strategies you may have used to save for retirement.

During your working life you (hopefully) made regular contributions to your super fund where it remained untouched and compounding for three to four decades.

In retirement, it’s the reverse. Once you transfer your super into retirement phase, you withdraw regular income to live on and can’t contribute any more to grow your balance. Any growth must come from earnings on existing investments.

This drawdown of wealth in retirement can last almost as long as the wealth accumulation phase. Depending on when you retire and how long you live, you could be looking at up to 30 years or so.

Putting the income horse before the investment cart

Before you get into the nitty gritty of how to structure your retirement investment portfolio, you need to get a handle on how much income you will need to live on.

About the author

Barbara Drury

Barbara is a financial journalist and author with over 30 years’ experience in Australia and the UK. She is a contributor to The Sydney Morning Herald and The Age Money section, and has worked for the Australian Financial Review and The Australian.

Barbara is the author of Alan Kohler’s Eureka Report Guide to Personal Investing, Sorting Out Your Finances for Dummies and Personal Finance for Dummies and co-author of Investing for Dummies with James Kirby.