Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 243

GPS Framework: A new way to think about SMSF retirement income

Australia’s SMSF retirees should change their thinking about spending their savings to determine the best strategy for retirement, according to new research presented at the recent SMSF Association national conference. The 'GPS Framework' (Grow, Preserve, Spend) helps SMSF retirees set a direction for consumption of their retirement capital.

Melanie Dunn, Accurium’s SMSF Technical Services Manager speaking
at the 2018 SMSF Association National Conference in Sydney.

As people retire the key question changes from ‘Have I saved enough?’ to ‘How much can I spend from these savings?’ To answer this question, the retiree should consider whether their goal is to Grow, Preserve or Spend their savings over retirement.

Chart 1: GPS Framework: setting a direction for retirement spending

At one extreme are people with more than enough who will continue to grow their wealth during retirement. At the other extreme are those who don’t have enough to last and will run out of money. In between are the options of trying to preserve the value of the initial wealth or taking a path that maximises consumption but leaves little or nothing for the next generation.

Are SMSF retirees Growers, Preservers or Spenders?

The Accurium report considers the proportion of SMSF households that fall into the different segments of the GPS Framework. This assessment requires an understanding of the household’s desired spending level and amount of savings at retirement to support that lifestyle.

Accurium’s retirement healthcheck is a retirement planning tool that assesses the likelihood of retired households being able to meet their retirement spending goals. Analysis of nearly 800 SMSF households’ detailed retirement plans over the year to June 2017 showed a range of desired annual spending levels.

Chart 2: Desired annual spending levels in retirement for SMSF trustees

The ASFA Retirement Standard identifies approximately $60,000 per annum as a sufficient budget to enjoy a comfortable standard of living in retirement for a couple. The median spending level in retirement for SMSF couples in the Accurium database was $80,000.

While some households are spending at the ASFA standard or less, other SMSF households are looking forward to a more aspirational lifestyle in retirement. Accurium’s research showed 24% of SMSF couples aiming to spend over $100,000 per annum.

Accurium’s research also suggests that, on average, an SMSF couple might have about 35% of their total retirement savings outside the SMSF. Using SMSF asset data from their actuarial certificate database of over 60,000 SMSFs from the 2015-16 tax-year, Accurium estimated the proportion of 65-year-old SMSF couples with different balances.

Chart 3: Estimated distribution of total savings at retirement for SMSF couples

SMSF retiree balances are typically larger than those of members of other superannuation funds. Accurium estimated the median balance at June 2016 for a two-member SMSF at retirement was around $1,137,000. This is about four times the level of an average APRA-regulated household approaching retirement. The median couple with $1,137,000 in their SMSF therefore might have total retirement savings of around $1,750,000.

Our research shows that about 25% of SMSF retiree couples are Growers, who will increase savings in retirement, 28% are Preservers who will retain the majority of the value of their savings, and just over 20% are Spenders who will spend most of their savings across their retirement, based on a typical SMSF retirement spending goal of $80,000 a year. The remaining 26% are at risk of running out of savings during retirement and might need to spend less so that their money lasts as long as they do.

However, it varies by annual expenditure. While 38% are Growers, 35% Preservers and 18% Spenders at $60,000 a year spending (the ASFA ‘comfortable’ standard), this declines to 18%, 25% and 18% respectively at a more aspirational $100,000 a year spending level because they are spending more of their retirement savings.

Using the GPS Framework when setting retirement income strategies

Accurium’s research concludes that in retirement, it is the level of spending rather than investment returns which is the primary determinant of retirement outcomes. SMSF households can utilise the GPS Framework to assess whether their retirement spending is aligned with their goal to Grow, Preserve or Spend retirement savings.

“Many SMSF retirees adopt similar financial strategies when it comes to spending but this report highlights that retirees should think differently”, says Accurium’s General Manager, Doug McBirnie. “The amount they can spend and the appropriate retirement strategy depends on where they sit in the GPS Framework. The financial risks faced are different in each segment and the GPS Framework can provide a guide for retirees when it comes to setting their retirement income strategy.”

The report suggests that a simple bucket approach to generating retirement income might be appropriate for the limited risks faced by Growers. However, a more detailed cashflow strategy might be needed for Preservers who are more exposed to market timing risks, while Spenders need to focus more on managing the risk of outliving their savings and should consider the benefits of an income layering approach to ensure they have enough to continue to meet their needs.

The full GPS Framework is linked here.


Melanie Dunn is SMSF Technical Services Manager at Accurium, a sponsor of Cuffelinks. This article is general information and does not consider the circumstances of any investor.



When the $1.6m cap is no longer relevant

Moving your SMSF into pension phase

Misplaced focus on high yielding stocks in retirement


Most viewed in recent weeks

How to enjoy your retirement

Amid thousands of comments, tips include developing interests to keep occupied, planning in advance to have enough money, staying connected with friends and communities ... should you defer retirement or just do it?

Results from our retirement experiences survey

Retirement is a good experience if you plan for it and manage your time, but freedom from money worries is key. Many retirees enjoy managing their money but SMSFs are not for everyone. Each retirement is different.

A tonic for turbulent times: my nine tips for investing

Investing is often portrayed as unapproachably complex. Can it be distilled into nine tips? An economist with 35 years of experience through numerous market cycles and events has given it a shot.

Rival standard for savings and incomes in retirement

A new standard argues the majority of Australians will never achieve the ASFA 'comfortable' level of retirement savings and it amounts to 'fearmongering' by vested interests. If comfortable is aspirational, so be it.

Dalio v Marks is common sense v uncommon sense

Billionaire fund manager standoff: Ray Dalio thinks investing is common sense and markets are simple, while Howard Marks says complex and convoluted 'second-level' thinking is needed for superior returns.

Fear is good if you are not part of the herd

If you feel fear when the market loses its head, you become part of the herd. Develop habits to embrace the fear. Identify the cause, decide if you need to take action and own the result without looking back. 

Latest Updates


The paradox of investment cycles

Now we're captivated by inflation and higher rates but only a year ago, investors were certain of the supremacy of US companies, the benign nature of inflation and the remoteness of tighter monetary policy.


Reporting Season will show cost control and pricing power

Companies have been slow to update guidance and we have yet to see the impact of inflation expectations in earnings and outlooks. Companies need to insulate costs from inflation while enjoying an uptick in revenue.


The early signals for August company earnings

Weaker share prices may have already discounted some bad news, but cost inflation is creating wide divergences inside and across sectors. Early results show some companies are strong enough to resist sector falls.


The compelling 20-year flight of SYD into private hands

In 2002, the share price of the company that became Sydney Airport (SYD) hit 80 cents from the $2 IPO price. After 20 years of astute investment driving revenue increases, it sold to private hands for $8.75 in 2022.

Investment strategies

Ethical investing responding to some short-term challenges

There are significant differences in the sector weightings of an ethical fund versus an index, and while this has caused some short-term headwinds recently, the tailwinds are expected to blow over the long term.

Investment strategies

If you are new to investing, avoid these 10 common mistakes

Many new investors make common mistakes while learning about markets. Losses are inevitable. Newbies should read more and develop a long-term focus while avoiding big mistakes and not aiming to be brilliant.

Investment strategies

RMBS today: rising rate-linked income with capital preservation

Lenders use Residential Mortgage-Backed Securities to finance mortgages and RMBS are available to retail investors through fund structures. They come with many layers of protection beyond movements in house prices. 



© 2022 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.