As featured in November edition of Equity. View the original article here.

After years of working, paying off the mortgage and carefully building savings, retirement is the time when your money should start working for you. Yet in practice, turning a lifetime of savings into a consistent income that keeps up with inflation is one of the biggest challenges facing retirees today.

The share market can rise and fall quickly, interest rates shift with economic cycles, and living costs have grown faster than expected. Many retirees who once relied on term deposits or dividend traditional fixed income solutions are finding that these options no longer stretch as far as they used to. This has encouraged a broader search for investments that can deliver dependable income while still fitting within a manageable level of risk.

Australians are also living longer, and often enjoy two or even three decades in retirement. That is a long time for savings to last, especially as retirees juggle competing priorities such as maintaining lifestyle, funding healthcare, and leaving something for family. The traditional approach of holding large amounts in cash or listed shares is now being complemented by strategies that aim to create diversified, and more predictable income streams.

Some investors adopt a “bucket strategy” that separates their money into short, medium and long-term goals. The first bucket covers a few years of expenses, often held in cash or conservative assets. The second focuses on generating income, while the third is invested for long-term growth. Having a clear framework like this can help retirees reduce anxiety about short-term market changes and plan withdrawals with confidence.

Within that middle income bucket, investors have been exploring a range of options, from high-quality bonds and income-oriented funds to newer categories such as Australian and global private credit. These are designed to generate income from lending activities, offering a source of cash flow that does not necessarily move in step with the share market.

Private credit (global private credit specifically) refers to lending that happens outside traditional banks. It provides funding to established, cash-generating companies, often in essential sectors such as healthcare, technology, manufacturing or infrastructure. In return, lenders receive regular interest payments, creating a potential income stream for investors.

The market for private credit has expanded dramatically over the past decade. Globally, it now represents a multi-trillion-dollar asset class as regulations have prevented banks from holding too many long-term assets with short-term liabilities. Institutional investors such as superannuation funds and endowments have increased their exposure because global private credit can offer income potential and diversification benefits compared with traditional fixed-income assets.

For individual investors, global private credit can be appealing because the loans are typically backed by real businesses with contractual securities and repayments. They may also be less affected by the short-term swings of listed markets. However, these investments are not risk-free. The quality of the underlying borrowers, the level of diversification and the experience of the manager all play important roles in determining outcomes.

Historically, access to global private credit was limited to large investors or specialist funds. That is beginning to change. New platforms and products are making it possible for Australians to participate in this global market through vehicles such as term-based investment accounts that pool capital into diversified portfolios across thousands of loans.

These solutions are designed to make global private credit accessible in a way that is straightforward to use and understand. Investors can typically select an investment term that suits their needs, such as one, two or five years, and choose whether to receive monthly income payments direct to their bank accounts, or reinvest them to compound over time. Return targets are linked to the Reserve Bank of Australia’s Cash Rate plus a fixed margin, which means target rates can adjust in line, as broader interest-rate settings change.

For retirees, the structure can provide a balance between accessibility, diversification and income. The defined term can align with planning horizons, while the monthly income stream can complement other sources such as pensions, dividends or rent.

The shift toward investments like global private credit reflects a broader change in how Australians are approaching retirement planning. For decades, income was often seen as the by-product of growth assets, such as selling shares or relying on dividends. Now, with longer lifespans and evolving markets, retirees are placing greater emphasis on having predictable cash flow.

That focus on consistency does not mean avoiding risk altogether. Rather, it means diversifying across a range of income-producing assets that behave differently from each other. A mix of bank deposits, bonds, equities and alternative income strategies can help smooth the ride while still aiming to preserve capital over time.

Another driver of this shift is technology. Digital investment platforms now make it easier to access professionally managed global portfolios, complete transactions online and monitor performance through user-friendly dashboards. This accessibility is enabling individual investors to tap into new markets, once reserved for institutions, in a transparent, regulated way.

Global private credit has become one of the fastest-growing areas of finance. In the United States and Europe, it already accounts for the majority share of corporate middle-market lending. Australia’s market is still emerging but growing quickly as investors seek income sources beyond listed shares.

The key is how it fits into a broader portfolio. For a retiree, global private credit can serve as one of several tools for generating income. It sits between traditional fixed income and equity risk, providing contractual income potential while being linked to real-world businesses rather than share price movements.

As always, understanding how the structure works is important. Investors should consider the level of diversification in the underlying loans, the expertise of the manager, and the liquidity of the product. Investments accounts that are designed for a set term are better suited to money that can be committed for that period.

One example of how these strategies are being opened to everyday investors is TermPlus, an Australian investment platform developed by Pengana Capital Group. TermPlus provides access to a diversified global private credit portfolio managed alongside global investment leader Mercer. Investors can choose fixed terms of one, two or five years, each targeting monthly returns that set at a fixed margin above the RBA Cash Rate. Monthly income can either be paid to a bank account or reinvested.

Every TermPlus account benefits from a three-layer protection mechanism that includes a Support Account, a pool of capital co-invested alongside customers, designed to support both monthly income and the return of invested funds at maturity.

While TermPlus is one example of how global private credit is being made accessible, it also illustrates a wider trend: bringing institutional-grade investment ideas to individuals in a transparent, easy-to-use format. For retirees, that means more ways to diversify income streams and align their savings with personal goals.

Managing retirement income today requires more thought than simply choosing between shares and savings accounts. The aim is to create a structure that supports your lifestyle, keeps pace with inflation and provides flexibility for the future. For many retirees, that means combining traditional investments with new, professionally managed options that can deliver regular income from global private markets.

Whether through global private credit or other diversified income strategies, the aim is the same: generating reliable income that helps you enjoy retirement with confidence.