How to generate income for retirement

A common question I get asked at Stockspot, by retirees and pre-retirees, is ‘how do I generate income for retirement?’ Ensuring you have enough income to sustain your lifestyle is important and your desire for certainty (certainty comes at a price), risk appetite and investment timeframe can effect the strategy you chose.
Chris explores the two most common approaches; a specific retirement income product (such as an annuity) vs investing in a portfolio of income generating assets and discusses the pros and cons of each.
Stockspot offer specific income products such as Topaz Income (which you can read more about here www.stockspot.com.au/investin...) speak to a member of client care if you’d like to find out more about Stockspot's balanced portfolio and which may be the best option to help you meet your investing goals www.stockspot.com.au/contact-us/ .
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Stockspot Topaz Income Portfolio / • Stockspot Topaz Income...
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Read more:
Starting an SMSF pension from your Stockspot SMSF account / blog.stockspot.com.au/startin...
How to invest when youre retired blog.stockspot.com.au/how-to-...
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Disclaimer: Stockspot Pty Ltd ABN 87 163 214 319 is a licensed Australian Financial Services provider (AFSL 536082) regulated by ASIC. Any advice contained in this video is general advice only and has been prepared without considering your objectives, financial situation or needs. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate taxation and legal advice. Investing into financial products involves risk. Past performance of financial products are no assurance of future performance. Please read our Financial Services Guide on stockspot.com.au before deciding whether to obtain financial services from us.
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[@KyleRingrose]

The strategy of drawing the dividends (plus franking) and selling a little bit of capital to fund the balance of retirement expenses makes a lot of sense. This strategy mitgates sequencing risk in a way that traditional Account Based Pensions (ABP) fail to do. With an ABP all dividend and other income is immediately reinvested in the market so each pension "pay day" assets must be sold to make the pension payment. The retiree can be exposed to significant sequencing risk in this scenario. Unfortunately super funds are struggling to transition from wealth accumulation (where reinvestment of income makes sense) to providing income streams (where reinvestment of income makes little or no sense). This situation is even more pronounced for high balance retirees who may be able to live off dividends alone and may choose never to sell down capital. Why should these retirees elect be exposed to sequencing risk through an ABP when it is so unncessary?