Case Study|Retirement Planning| Joe & Kerry

Case Study | Retirement Planning | Joe & Kerry


Joe & Kerry both worked hard in their careers while bringing up three children.  Like most, they live a busy lifestyle.  Although they love what they do they realise that the day they finish work and retire is coming at a faster pace than what they thought.

Joe & Kerry want to be able to maintain their active lifestyle post work and have never really completed any planning along the way.  Just receiving the normal employer super contributions and concentrating on paying down their debt.

However, they had been reading a lot lately about the need to plan for their retirement as early as possible.  They realise that they may have left it a little late and are now concerned they may not be able to afford to retire on their own terms and be able to live the active lifestyle they envisioned for themselves post work.

Like most is something they had not put much time and energy into due to their busy lifestyle, it was put in the too hard basket.

They had been meaning to get in contact with a financial planner and were very confused about what strategies they should be implemented while being concerned that they were just going to be sold a product rather than advice that was going to put them into a better position to meet their future needs.

Joe & Kerry had read one of our posts about retirement planning and made the decision to contact us and made an initial appointment to start the conversation.

When Joe & Kerry came in they were a little apprehensive at first however after explaining what we covered in our first meeting they were more relaxed.  As with all first meetings, we explain that we are there to help them uncover what’s getting in the way of them achieving whatever it is they working towards, help them work out what is getting in the way and map out a plan of action.

We have a framework that works, helps clients gain maximum value from this meeting while getting crystal clear on what it is they need to be doing, but at the end of the day we will be guided by the client on where they take the meeting.  A lot of people are concerned they might be sold something.  We take a different approach to these meetings, provide actionable takeaways, using the meeting more as a fit process.

The first step was discussing what the future looked like for Joe & Kerry and why that was important to them.  We were able to gain a really good grip on what Joe & Kerry wanted.  We then zoomed into where they were right now, where their finances sat at this present point in time and thirdly we looked at what was getting in the way.  All of which led to a detailed roadmap for Joe & Kerry.

Why now?  They felt that they should have done more in saving for their retirement but now had the resources to do so, they just didn’t know what they should be doing or where to start.

At the end of the first meeting, Joe & Kerry agreed the below were their main priorities.  As with all new clients we take the time to understand their current position, assess all the options and in the second meeting present all the options and agree on the best way forward, that is the direction the client wants to take.

Sometimes what is financially best is not what the client wants.  That’s why financial planning is an individual thing.

Joe & Kerry’s main priorities:

  • They wanted to pay their mortgage down as quickly as possible, they felt that they should be further ahead with repaying their mortgage.
  • They wanted the choice to be able to retire at the latest at age 65, but would prefer the option to retire earlier if they were able to afford it and the timing was right.
  • At least maintain their current lifestyle in retirement.  They estimated this would be approx $70k pa
  • They loved to travel but were not into expensive holidays and did not necessarily want to go overseas every year.  Joe & Kerry thought $10,000 pa allocated to overseas travel would be enough.
  • They wanted to make sure they were able to replace their cars at least every 10 yrs, therefore, we worked out they needed to allocate approx $2,000 pa towards this.
  • They would like to spend the winter traveling and exploring Australia in their caravan.
  • They know grandchildren might be on the horizon over the next 5-10yrs and would like to have the flexibility to spend time with them.
  • They love their leisure activities, Joe is into tennis and Kerry loves her golf.  They would love more time to work on their tennis and golf.
  • They also have a number of other interests they would love to spend time pursuing.
  • They also wanted to be in a position to assist their kids on the odd occasion.  At this stage amounts were unknown but they wanted to know they had resources if they wanted to help out.

In relation to their investment objectives, Joe & Kerry previously read about self-managed super funds, however, thought they did not have the time or the expertise to be able to manage one.  They also were not concerned about whether they owned direct shares or not, as long as they received good returns and minimised the investment risk as much as possible they would be happy.

They were comfortable with an allocation of 60% growth assets and 40% conservative assets.

Current Position:

Joe aged 57 worked as a manager on $120,000 pa.

Kerry also aged 57 worked in an administration role on $80,000pa.

They have three adult children with the last leaving home recently.

Joe has a super fund worth $450,000 while Kerry’s super is worth $331,000.

Their home is worth $1.2million and they have a mortgage of $300,000 at an interest rate of 4.8%.

They own their own cars outright and also own a caravan.

In the interests of privacy, we have altered some of the details.

After completing in-depth research into their current financial position we met again to discuss the possible options with the view that any advice would be provided to ensure they would be able to live their stated lifestyle in retirement.

We first calculated what Joe & Kerry would need from an asset perspective to fund their retirement lifestyle.  We determined they would require $1,963,462 to fund their lifestyle until age 100.  Given that many retirement calculators use life expectancy, we prefer to take the more conservative option and always calculate out to age 100.  We are all living longer and with medical advances, we are more likely to live longer thus the reason we use this number.

Strategy 1: Do nothing

If Joe & Kerry were to continue to do what they are doing, that is direct all excess cash to their home loan they would accumulate approx $2,089,341 which means they would be able to comfortably meet their needs.

Once they had paid off the home loan they any excess cash would be placed into an investment while their super would keep accumulating.

Strategy 2: Kerry to start a Transition to Retirement Pension to assist in paying down the mortgage at a faster pace

As one of their priorities was to pay down the mortgage as quickly as possible we ran some numbers on what that would look like if we started a Transition to Retirement Pension for Kerry.  Why? Kerry would still be under age 60, therefore, part of the income would be taxed (albeit at a slightly lower rate as she would receive a 15% rebate on the income).

We also looked at Kerry salary sacrificing while taking a pension from her super to assist from a tax perspective and help them pay down their debt at a faster pace.  Upon paying down the debt any excess income would be used to salary sacrifice into super up to their limits.  Any further excess income would be directed to an investment account.

We worked out they would pay off their debt one year earlier and would accumulate approx $2,122,338, $32,997 better off.

Strategy 3: Maximise their salary sacrifice and pay down debt with excess income

In this strategy Joe & Kerry would be maximising their contributions to super via salary sacrifice, excess income directed to the home loan and when the home loan was paid off the excess would be directed to an investment.

We also looked at re-structuring their super to ensure they were generating income that could be used to fund future pension payments without the need to sell down assets in bad markets to fund pension payments.  A strategy we have used for many years that allowed our clients through such events as the global financial crisis to maintain their lifestyle without the need to sell down assets that fallen significantly.

The end result was they would be able to accumulate $2,230,416, $266,954 better off than if they kept going as they were.


Although their priority was to eliminate their debt as quickly as possible, after looking at the options and given it would only be paid off one year earlier they opted for the third strategy as this also allowed them the flexibility to retire earlier if they saw fit.

Below we provide a summary (not comprehensive of their one-page financial plan)

Joe & Kerry’s one-page plan:

Main Priorities:

Money is the vehicle to reaching your goals, and not as the goal itself.

  • We want to have the option to retire on my terms, at the latest age 65 and be able to maintain my current lifestyle in retirement.
  • We want to be able to travel extensively through Australia with our caravan predominately through the winter months.
  • We want the ability to go on the odd overseas holiday from time to time and especially complete an European holiday upon retiring.
  • We want to pursue our interests while spending time improving our golf and tennis games.
  • We want to be able to spend quality time with our family and especially assist when we have grandchildren.

Next Steps – (3-6mths)

Focus on what we can control.

  • Start building up an emergency cash account, ideally up to 1 yrs worth of income
  • Maintain your current income protection policies
  • Rollover their super to a more flexible super option, to allow for income generation
  • Invest in low-cost index funds (we provided specific recommendations based on their needs)
  • Salary Sacrifice up to their individual limits ($25,000 less their employer super contributions)
  • Seek advice to update their wills
  • Excess income to be directed to their home loan
  • Contact their bank and ask for a reduction in their interest rate on their home loan

Long Term – (6mths plus)

  • Continue to direct excess income to the home loan
  • Continue with salary sacrifice contributions up to individual levels
  • Excess cash post paying the home loan down to be either directed into super or setting up a separate investment outside super
  • Start accumulating cash within super prior to retirement to create a buffer
  • Confirm retirement date and options
  • Review super strategies in line with changes that will benefit you leading to retirement

Note: This is a shortened version to give you some context of work we do for clients.  We also note that that the financial plan is an evolving plan of action.  All sorts of things can happen in one’s life that will lead to constant re-adjustments based on the events in one’s life.  I liken it to a pilot piloting a plan.  They do all the hard work to plot the course prior to taking off.  However a plane is off course 90% of the time, they are constantly making course corrections to reach their destination.  Financial planning is no different, we are constantly course-correcting based on the client’s life and external factors which you cannot control.  We are there keen our client’s on track.

End Result:

Joe & Kerry now had a formal plan on how they were going to achieve and maintain their lifestyle in retirement.  They now know what they need to do to maximise their position to ensure it becomes a reality and know that if they wanted too, they had the flexibility to retire earlier if that suited them.

For Joe & Kerry, they were now confident in their plan going forward, it was simple for them to understand, not complicated and they felt a big weight had been lifted off their shoulders knowing what needed to be done to achieve their dream.  They were grateful that they had a partner in this journey (Jigsaw Private Wealth) to guide them and keep them on track.  Any answer they wanted was only a phone call or email away.

They were also pleased that we would be meeting with them every 6 months to review and recalibrate based on their circumstances as life happens.

They could go away and now just live life knowing they did not have to think or worry about the financial stuff as they would be able to review every 6mths without having to do the work and stress out themselves about whether they were doing the right thing.

If this is something you feel that you need to be doing or need to explore, feel free to email me at or phone me on 0401 253 729 to arrange a no-obligation appointment.

If you feel someone would benefit from this information, feel free to send it on.


Make it a great life!


Glenn Doherty – CFP – Founder & Financial Organiser at Jigsaw Private Wealth


Mob: 0401 253 729

Calculations: We assumed a rate of return of 6.5%, inflation of 2.5%, an income of $82,000 pa indexed from age 65.  Please note this is a snapshot and not a comprehensive detail of what was implemented for these clients.  This is a snippet of what we do for clients and is not to be taken as advice.  Everyone is different and you should seek your own personal advice from a qualified financial planner.

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Financial Planning Investments Retirement Self Managed Super Fund Superannuation Uncategorized