What avoiding the five mistakes looks like in dollars. Neither household is a real client; both use 2026–27 settings and are approximate.
Two years from stopping.
David is a senior project manager on $190,000; Helen is a part-time pharmacist on $70,000. Super: David $1.43m, Helen $470k. A paid-off home in Sydney, $300,000 of Australian shares held jointly (cost base $180,000), two adult children. They want David to stop at 65 and Helen at 63, and to spend about $110,000 a year. Their question is "do we have enough?" Their actual exposure is that every one of the five decisions is on default settings.
01 · Contributions
Finish deliberately.
David's employer already pays $22,800 a year; the $9,700 left under his $32,500 cap goes in by salary sacrifice, saving roughly $2,300 a year in tax. Helen is the bigger opportunity: her balance was under $500,000 last 30 June, so about $100,000 of unused cap from the past five years is available, but only this year. A $40,000 personal deductible contribution saves her roughly $4,500 net this year and moves the money out of a bank account.
02 · Pension phase
Start on purpose.
Helen retires at 63 and can move to a retirement-phase pension immediately: earnings go from up to 15% to 0%. David's $1.43m idling in accumulation for two years past eligibility would cost in the order of $10,000 a year in avoidable earnings tax. Both balances fit under the $2.1m cap each; the design point is that they use two caps, not one.
03 · Asset location
Each dollar where it's taxed best.
The $300,000 of fully franked shares pays about $12,000 in dividends carrying $5,100 of franking credits. In David's hands at 39% that is a further $1,500 of tax to pay; inside a retirement-phase pension the $5,100 is refunded in cash, a swing of roughly $6,700 a year on the same shares. The $60,000 gain costs about $11,700 if realised in David's last $190,000 year, about $1,800 in Helen's first non-working year, and the timing now also has to respect 1 July 2027.
04 · Drawdown
Decide the order now.
$110,000 a year means Bucket 1 holds about $220,000 in cash, Bucket 2 about $550,000 in income assets, and Bucket 3 the remaining $1.1m+ in growth, untouched for seven years whatever markets do. At $2.2m of assessable assets they are well above the Age Pension cut-off, but their deemed income of about $69,000 sits under the Commonwealth Seniors Health Card limit, so the card and its concessions is a live entitlement at 67 if the structure is right.
05 · After you
Design the default.
Roughly 80% of David's balance is taxable component. Paid to Helen it is tax-free; paid to the children it would carry up to 17%, around $190,000 on today's balance. Once David has retired, a withdraw-and-recontribute of $390,000 (his three-year bring-forward) converts about $312,000 of taxable component to tax-free and takes roughly $53,000 off that figure, while a reversionary nomination to Helen keeps the pension, and its cap position, running without a gap.
None of this requires a forecast. It requires the five decisions to be made, in this order, in the next two years, and in writing.
Three years from stopping, on her own.
Margaret is a nurse unit manager on $115,000, single, with two adult children. Super: $880,000 in her industry fund's default option. A paid-off home in Brisbane and $150,000 of Australian shares held in her own name (cost base $95,000). She wants to stop at 64 and spend about $70,000 a year. Her question is "will it last?" Her actual exposure is that nobody has looked at any of the five decisions since she chose the fund twenty years ago.
01 · Contributions
Finish deliberately.
Her employer's 12% pays $13,800 a year, leaving $18,700 of room under the $32,500 cap. Salary sacrificing that amount saves her roughly $4,500 a year in tax, three years running, and moves money she wasn't spending into a concessional environment. The carry-forward door is already shut for her (her balance passed $500,000 some years ago), so the ordinary cap is what's left, and it is worth using every year it remains open.
02 · Pension phase
Start on purpose.
At 64 she has met a condition of release and can move the whole balance to a retirement-phase pension the week she stops. Left in accumulation, $880,000 earning around 5% would carry in the order of $6,000 a year in earnings tax that pension phase would not. Her balance sits well inside the $2.1m cap; the design point is to start the pension deliberately and choose which assets support it.
03 · Asset location
Each dollar where it's taxed best.
Her shares pay about $6,000 in fully franked dividends carrying $2,570 of franking credits. In her hands at 39% she still owes a little tax on them; inside a pension the credits come back in cash, a swing of roughly $3,300 a year. The $55,000 gain costs around $10,700 if realised in her last $115,000 year and around $1,500 in her first non-working year. Because 1 July 2027 falls before she retires, whether those shares belong inside super at all is a decision for this year, not for 64.
04 · Drawdown
Decide the order now.
$70,000 a year means Bucket 1 holds about $140,000 in cash, Bucket 2 about $350,000 in income assets, and Bucket 3 the remaining $390,000+ in growth, untouched for seven years whatever markets do. Her assets sit above the single Age Pension cut-off, but her deemed income is comfortably under the single Commonwealth Seniors Health Card limit, so the card at 67 is the entitlement to design for.
05 · After you
Design the default.
Roughly 70% of her balance is taxable component. With no spouse, the whole benefit goes to her children, and on today's balance the tax could be around $105,000. Once she has retired, a withdraw-and-recontribute of $390,000 (her three-year bring-forward) converts about $273,000 of taxable component to tax-free and takes roughly $46,000 off that figure. A binding nomination to the children, renewed before it lapses, keeps the decision hers rather than the trustee's.
Margaret's numbers are smaller than David and Helen's. The proportion of her retirement they represent is larger.
