Financial
Roadmap
A clear, personalised path to your financial goals.
6 July, 2020
Reducing your retirement income
First Financial Team
Some of the information in this article may be out of date. We are currently in the process of updating our content to reflect FY26 details.
Back in March, when the country felt the initial financial impact of the COVID-19 pandemic, the Federal Government released a series of stimulus benefits to help support Australians. One of the initiatives within the package was a reduction in the minimum drawdown rates for account based pensions. Designed to help minimise the need for selling investments in a depressed market, the reduced minimum was effective immediately.
We reported on this change in our summary article and today we discuss whether implementing the new minimum for your pension payment is a viable option for this financial year. Lowering your retirement income is an important decision that can impact your lifestyle, so we have outlined some of the points to consider.
The temporary adjusted drawdown rates are outlined in this table. The 50% reduction is applicable for this new financial year 2020-21.
Review your budget
Can you afford it? This is the first question you need to ask when considering a reduction in your retirement income. Your pension payment might be the key factor in supporting your lifestyle and if you reduce it by 50%… what would that do to your day to day life?
It’s quite possible that during the current climate, your income needs have actually reduced… especially if you are no longer travelling or regularly dining out. So this is the perfect opportunity to do a thorough review of your budget. Assess your needs and always make sure you have some extra funds available for unexpected expenses. Seek professional advice if you are unsure of exactly how the new minimum would affect your payments.
Benefits to reducing your pension payments
Utilising the lower drawdown rate does have its benefits. One of the most significant is that your retirement funds remain in their tax-free environment for longer and any money that remains invested will grow once the economy and market recover from the recent downturn.
Reducing your pension payments means more of your funds will be retained in cash. Our unique Investment Philosophy is specifically designed to hold up to 12 months’ worth of income in the ‘cash bucket’ of a portfolio. For retirees, assets within this cash bucket are accessed for the regular drawdown payments. These defensive assets are less volatile, so even during market fluctuations, they provide the same steady income flow.
If you are in a position to implement the reduced minimum rate for your pension, the funds you already hold in your cash bucket will subsequently last much longer than originally expected… and perhaps even provide you with the opportunity to move some funds out of the defensive environment and back into growth investments.
Investment opportunities
If you are in a position to reduce your pension drawdown, now could be an opportunity to invest during a market low… and while we understand that, for some, market instability is daunting, there are others who will seize the chance to buy good quality companies at significantly reduced rates.
If you think this is a strategy you might consider, again, we recommend seeking professional advice.
Some companies will face challenges over the next year or two and you want to make sure your portfolio is structured in a fashion that will continue to support you once the drawdown rates have returned to normal.
Unsure what’s right for you?
The team at First Financial can help you determine what best suits your personal situation.
We are here to answer your questions and provide you with recommendations based on your unique circumstances.
We can help calculate your annual income payments based on the new lower minimum and review whether the reduced pension will be an adequate amount.
If you’d like to speak with one of our experienced financial advisers, please contact us today. Read more Retirement Planning articles.
YOUR FINANCIAL JOUNEY
Building your financial future
Every client journey begins with a conversation. We look closely at where you are now, what matters to you, and what’s possible. Then we structure our advice to match.
Financial
Tax
Efficiency
Proactive strategies to maximise your tax savings.
Personalised
Investing
Tailored plans aligned with your goals and risk profile.
Ongoing
Support
Regular guidance to keep your plan on track.
CLIENT STORY
Tim and Adam
Life Stage:
Early retirement and working professional
Background:
When Tim received an overseas medical settlement, he and Adam had just 14 days left in a 90-day window. They needed clear guidance, fast. A referral led them to First Financial.
- Only two weeks left to meet urgent legal and financial deadlines
- Wanted to preserve capital while setting up income for the future
- Needed a plan that supported both retirement and ongoing work
- Hoped to find advice that felt personal, not transactional
- Managed every moving piece, from legal documents to super rollovers
- Designed a strategy that supported both Tim’s retirement and Adam’s career
- Offered clear guidance with steady follow-through, with no stress or pressure
- Built in ethical investing and flexibility, without sacrificing performance
“We’re in totally different life stages, but First Financial built a strategy that supports us both. From urgent legal steps to ethical investing, they handled every detail with calm, care, and real expertise. It’s financial freedom without compromise, and we couldn’t have done it without them.”
CLIENT STORY
Larry and Virginia
Life Stage:
Newly retired
Background:
As retirement neared, Larry and Virginia were ready to enjoy travel, family, and freedom, without uncertainty. A friend recommended First Financial, and from the first meeting, they had a clear plan, a safety net, and people they trusted.
- Wanted to travel and enjoy retirement without second-guessing finances
- Needed a structured income plan with buffers for the unexpected
- Valued guidance that felt honest and human, not overcomplicated
- Needed people they could call and count on
- Created a reliable income stream with a set-aside safety net for the unexpected
- Gave them the freedom to travel and spend meaningfully with family
- Kept advice simple, thoughtful, and tailored to what mattered to them
- Built a lasting partnership based on trust
“We’ve travelled the world, Europe, Sri Lanka, Vietnam, without once stressing about the money. They made everything feel simple and gave us the confidence to live well. We feel secure because we know exactly where we stand, and that peace of mind means everything.”
CLIENT STORY
John
Life Stage:
Retired business owner
Background:
After decades of running a successful pharmacy, John sought financial guidance to simplify decision-making and support long-term planning.
- Navigated the sale of a long-held business
- Wanted simple, honest advice after burnout
- Needed a hands-on adviser he could talk to
- Desired financial guidance aligned with lifestyle goals
- Crafted a strategy that supports relaxed, post-work life
- Offered approachable, plain-English advice
- Maintained an ongoing, trustworthy relationship
- Provided flexibility with investments and cash flow
“I feel genuinely supported by First Financial. I can ask anything, and there’s no pressure, just clear advice and real care. The money’s growing, I’m not stressed about it, and I feel completely at ease for the first time. I don’t miss work, but I’d miss the support I get from First Financial.”
CLIENT STORY
Graeme and Craig
Life Stage:
Retired and semi-retired
Background:
Referred by friends helped through aged care, Craig sought secure financial guidance after inheriting funds.
- Invest inheritance securely without high risk
- Maintain a modest lifestyle with confidence
- Building trust for someone new to advice
- Accessible, personalised advice
- Provided a low-risk strategy with regular income
- Reassured with steady, market-aware updates
- Established trust through responsiveness and warmth
- Delivered calm, expert support through all transitions
“We feel very secure with First Financial, the income just comes in, and we know everything is being looked after. It’s not just safe, it’s smart. We’ve recommended them to others because we genuinely believe in the team.”
CLIENT STORY
Lyn
Life Stage:
Retired widow
Background:
Lyn stepped into financial management for the first time after her husband's passing. With patience and care, First Financial supported her through grief, learning, and empowerment.
- Had never managed finances before
- Was overwhelmed after her husband’s passing
- Needed plain-English explanations and patience
- Sought emotional support and practical clarity
- Offered caring, respectful advice at her pace
- Rebuilt confidence with diagrams, stories, and reassurance
- Supported gradual decision-making around retirement
- Remained a trusted constant through major transitions
“After my husband passed, I was completely unsure where to start. First Financial gave me the space to learn, to ask questions, to grow confident. They drew a diagram that I still have. And now, I sleep well at night knowing I’ve got someone in my corner.”
CLIENT STORY
Jan
Life Stage:
Retired
Background:
Jan's husband managed the finances until entering aged care. Jan gradually stepped into the financial picture with First Financial’s support.
- Needed financial guidance after business sale
- Lacked experience managing complex finances
- Sought consistent income and long-term structure
- Wanted a familiar, reliable relationship
- Provided long-term support through several transitions
- Helped structure income reliably for retirement
- Empowered Jan through education and reassurance
- Delivered calm advice through both grief and growth
“The money just comes in. I don’t have to think about it. And I know they’re always there. They’ve always been there in the background, just quietly making things work.”
Meet our advisers
