I have $1.5m in investment debt. Should I pay it off before I retire?

September 21, 2025 — 5.01am

I’ve built a healthy share portfolio over the decades with leveraged debt. At present, I have $1.5 million in investment debt, and about $2.9 million in investment assets. What’s the rule of thumb for investment debt for retirees and pre-retirees? Loans are principal and interest to give me the necessary discipline to push them down. I expect to retire in three to five years’ time and have a healthy super balance that will use up all of my transfer balance cap.

Borrowing to invest in property attracts little thought, whereas borrowing to build a share portfolio is frequently depicted as a high-risk proposition, so I thank you for sharing a little of your journey here.

It’s wise to not want to be weighed down by debt as you head into retirement.Credit: Simon Letch

With regards carrying the debt into retirement, I would imagine you would want to get it at least neutrally geared, if not positively geared. It is probable that you won’t be paying a lot of tax in retirement, so a negatively geared situation doesn’t make much sense.

That aside, though, I don’t think there is any particular rule of thumb. The question I would have for you is: What is the goal here? If all the income generated by the share portfolio is then used to service the debt, how is it producing any benefit for you?

It can be a difficult mental switch to go from accumulating wealth to then using that wealth to support you later in life. But there’s no trophy handed out to the richest person in the cemetery, so just ensure you are clear on why you are pursuing this strategy.

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Hi Paul. I am able to access my superannuation early next year, on my 65th birthday. I will have just over $1 million available. My super fund has not provided me with much in terms of advice. I wish to pay off my $200,000 mortgage but am unsure of how I should invest the remainder. I am single, with no dependents, and I have no other debts.

Thanks for your question, and congratulations on having built such a robust retirement savings pool. Using super to become debt-free makes a lot of sense. Regarding your remaining superannuation savings, it depends on whether you are still working or are retired.

The end game with superannuation is to create an income stream. The whole point of superannuation is to facilitate your being able to live a comfortable life once your years in the workforce have come to an end.

If you are still working, then you should leave your remaining superannuation savings in the accumulation account so it continues to grow. There is a small amount of tax payable on the earnings while in accumulation phase, but if you don’t need the income (because you’re still working), in my experience it’s usually best to just leave it to continue to grow.

If, however, you’ve retired, then you would convert your superannuation savings into an income stream. The most popular form is known as an account-based pension, but annuities are also an option.

These income streams will give you income on at least a monthly basis. Given the information you’ve provided, I would expect the income paid out to you to be tax-free.

As a 65-year-old, the minimum drawing requirement will be 5 per cent of the balance. Therefore, you would receive $3333 a month (based on an $800,000 income stream). You can draw more if you wish, but you just need to be careful that you don’t run down the balance too quickly.

Paul Benson is a certified financial planner at Guidance Financial Services. He hosts the Financial Autonomy podcast. Questions to: [email protected]

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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