Retirement Income

From this month we are not receiving any regular salary payments. A lot of people talk about how difficult it is to switch from saving to spending in the transition to retirement. For example, see the Youtube video in this post. I am actually finding it easier than I thought it would be. Maybe this is because we don't actually need to directly sell shares in order to spend money. We spend money from our offset account, where we aim to have about a year's worth of spending. And we keep receiving "pensions" and dividends into the account or our brokerage accounts. And I buy and sell shares in trading, I'm not selling shares specifically to take money out of the brokerage accounts. We are also helped by the high dividend environment of Australia. You could actually live off dividends and spend a reasonable amount of money here in Australia.

Here is how I am thinking about each of our income streams or investment buckets in order of how automatically they send us money or not.

1. Unisuper pension: I just need to set up payments from the pension account for the year and then receive the payments of currently AUD 2,750 per month. I don't need to sell anything.

2. SMSF pension: Again I set up payments for the year–currently AUD 4,020 per month. But I need to make sure there is enough cash in the SMSF's Macquarie CMA to pay the pension. Given the automatic flow of dividends into the account there is enough to last till next September at the moment. I will need to move money now and then from our brokerage accounts to replenish this account. This can come from distributions or trading. 

These "pensions" are the required minimum distributions set by the Australian government in order to make the earnings on the superannuation pension account tax free. These are not defined-benefit pensions. 

3. Dividend and distribution paying investments: We have a lot of investments outside of superannuation that are paying dividends. Some are very regular and others sporadic. These might pay in total as much as the pensions. Some will be paid directly to our offset account and some to our Interactive Brokers accounts.  

Between these three sources, we get around 85% of the way to our annual spending not including mortgage payments, which I don't count as spending. So we need more sources of income to cover the remaining 15% and the mortgage payments.

4. Trading. The idea is to do medium term trading to make up the difference and grow the portfolio. Our "crypto basket" is one such trade. Gold is another, though it has been losing money this year. Other current trades are: ZIM (though it should pay dividends soon), Maas Group, Treasury Wine, and URF (US Residential Real Estate fund). I also trade some of our funds now and then. This is all very sporadic and might lose money.

5. Long-term investments: These are illiquid investments. They include Moominmama's superannuation, my US retirement account, and venture capital. We do receive distributions from venture investments, but they are very unpredictable. I could take payments from my US retirement account but there isn't any advantage in doing so now. We can only access Moominmama's superannuation after she turns 60 in 9 years time.

Longer term, I will get a pension from the UK government. That would be even more reliable than Unisuper, but will be declining in real terms, as Australian recipients don't get cost of living adjustments.