Funding the Three
Phases of Retirement

How to ensure your retirement years are as comfortable
and fulfilling as you have dreamed!

Prepare for the Three Phases of Retirement

How do you ensure your retirement years are as comfortable and fulfilling as you have dreamed?

As you plan for retirement, it’s crucial to consider its three phases. Each has its own financial requirements, and proper portfolio planning can help ensure you have the necessary funds to enjoy each stage of your retirement.

The Three Phases

Active years

The active years are a bold and busy period. They often represent the semi-retired, morning sun chasers, new-found golfers, and triathlon partakers. Financially, you have resources you’ve accumulated over an entire career. You may consider upgrading your home, travelling, or spending some of your savings and investment income on a lifestyle full of leisure.

Easy years

Realistically, there is a time later in retirement to say hello to slow mornings and unhurried days. In this the phase you spend more time with family and closer to home. With shifting priorities, your focus shifts from lifestyle spending to downsizing, volunteering, and engaging in more passive activities. Day to day spending can fall during this time and aside from care arrangements, big capital outlays may also be less common as you make fewer large purchases.

Higher-needs years

In the third stage, your finances may be impacted by rising healthcare expenses. Depending on your individual needs, it may be time to look at alternative accommodation options, like a retirement village or assisted living. Planning for this period can help you ensure you’ve set aside enough money for care and assistance, sparing your future self, and your loved ones, from potential financial stress.

Income and capital growth potential

Your savings will provide income to pay for expenses. But your money will also need to keep pace with inflation, and new costs such as healthcare and retirement accommodation. While capital preservation is important, capital growth should be considered too.

Retirement planning involves a balancing act between income, capital preservation and capital growth.

Diversification can deliver risk management benefits across that balancing act.

Income, capital growth and preservation across the three phases

Active years

  • Income producing investments fund lifestyle spending​.

  • Capital growth investments facilitate continued wealth building​.

  • Excess income can be reinvested​.

  • Actual mix depends on your specific needs.

Easy years

  • Potentially lower income required​.

  • Home downsizing can boost capital​ to help invest for later stage.

  • Ensuring your savings will outlive you (capital preservation) may start becoming more important than growing your savings (capital growth).

  • Actual mix depends on your specific needs.

Higher-needs years

  • Capital may be required for higher needs accommodation​.

  • Home sale can boost capital​.

  • Capital preservation is important in ensuring your savings are there to produce an income as long as you need it.

Finding income and capital growth

Achieving both income generation and capital growth can be pursued through various investment avenues. Here is a brief breakdown of a number of different options:

Government and corporate (“fixed interest”) bond funds
These funds invest in bonds issued by governments, giving investors a steady income through interest payments. It is worth remembering that the price of bonds can go up and down, especially if interest rates change or if the government’s financial health is affected.

This involves lending money to companies for either general or specific purposes. In some cases, loans may be secured against assets such as property. However, sometimes loans can be unsecured. Private debt investments can offer good returns, but it is important to understand the risks regarding the investments in the portfolio.

These investments allow you to invest directly into real estate or funds that own property. They can offer regular rental income and the investment thesis may include an assumption of capital growth in the asset over a period of time. Just remember, different types of property (like houses, offices, or retail spaces) can perform differently depending on what is happening in the economy. Some property funds can also have tax benefits by way of “tax-deferred income”.

Like direct/unlisted property funds but with a twist. They can be traded on the stock market, so you can buy and sell them easily. However, their underlying value can fluctuate and be influenced by changes in market rates and market sentiment.

When you buy shares in a company on a stock exchange, you are buying a piece of ownership. This can give you a shot at both making money as the company grows and getting a share of the profits through dividends. But keep an eye out—share prices can bounce around, as can the level of dividend a company pays, depending on the performance of the company. Shares can also have tax benefits by way of franked dividends.

By spreading your money across a range of different types of investments, you can better balance the potential for income and growth while also reducing the risk that comes with putting all your eggs in one basket.

Trilogy Funds has your three
phases of retirement covered.

Investing and retirement

Investing for retirement is not just about saving money; it is about making that money work harder, growing it over time to provide a steady income when you no longer have a regular paycheck.

Start early, stay consistent

One of the most powerful tools in retirement investing is time. The earlier you start investing, the more time your money has to grow and can potentially benefit from compounding returns. Even small, regular contributions to your retirement accounts can add up significantly over several decades. Stay consistent with your contributions, automating them, if possible, to ensure you are consistently building your retirement nest egg.

Diversify your portfolio

Diversification is critical for managing risk in your investment portfolio. By spreading your investments across different asset classes, you can help to reduce the impact of a downturn in any one sector, or even the under-performance of any one investment. Consider your risk tolerance and investment goals when determining the right mix of assets for your portfolio.

Utilise tax-advantaged investment vehicles

Tax-advantaged investment vehicles, like property funds, can offer potential tax benefits for retirement planning. These funds can provide exposure to commercial real estate, which may result in stable income streams and capital appreciation over time. Additionally, they may offer tax advantages such as depreciation deductions, capital gains tax concessions, and potential tax-deferred income distributions. Specifically, incorporating industrial property funds into a retirement portfolio could potentially enhance long-term wealth accumulation and income generation during retirement through benefitting from underlying economic changes such as heightened activity in last mile logistics centres and increased number of distribution centres. However, it is crucial to research and consider individual financial circumstances before investing and seek personalised guidance from a qualified financial advisor or tax professional.

Assess your risk tolerance

As you approach retirement, it is important to reassess your risk tolerance and adjust your investment strategy accordingly. While younger investors can typically afford to take on more risk in pursuit of higher returns, retirees generally prioritise capital preservation and achieving a steady income. We recommend seeking advice from qualified professionals and a financial adviser.

Our
Solutions

Trilogy Funds specialises in investments that deliver income streams, with a particular focus on assets that are backed by property or other real-estate assets.

When you invest with Trilogy Funds you can gain access to assets and opportunities you may not be able to as an individual and can add important diversification to your investment portfolio. You also access the investment management expertise of an organisation that has been investing on behalf of investors for over 25 years. This is particularly important, given the risks involved with all investments.

By including one of Trilogy Funds’ investment solutions in your investment portfolio, you have the opportunity to achieve a steady income stream during your active years, maintain your lifestyle during the easy years, and have the necessary resources for care and support during the high-needs years.1

  • Diversified income

Trilogy Enhanced Income Fund
Invests in

Cash, cash-style investments, investment-grade income securities and the Trilogy Monthly Income Trust.

  • $5,000 minimum investment

  • Monthly distribution2
  • 30 day access to funds
  • Investment grade securities

  • Private Real Estate Credit

Trilogy Monthly Income Trust
Invests in

Loans secured against registered first mortgages held over property, as well as cash and other fixed interest securities.

  • $10,000 minimum investment

  • Monthly distributions2
  • 17 year track record

  • Loans secured against registered first mortgages

  • Direct Property

Trilogy Industrial Property Trust
Invests in

A portfolio of Australian industrial properties diversified geographically and by tenant industry.

  • $20,000 minimum investment

  • Monthly distribution2

  • Capital growth potential

  • Tax deferred income

  • High quality tenants 100% leased to quality tenants

Disclaimer

  1.  Payment and amount of distributions not guaranteed, and subject to the terms of the PDS. Past performance is not a reliable indicator of future performance.
  2. Distributions are quoted net of management fees and costs and assume no reinvestment. Distributions are variable and are not guaranteed to be paid monthly. While the unit price is fixed, capital losses can occur if an asset of the Trust incurs a capital loss. Past performance is not a reliable indicator of future performance.