What is Income Targeting? And how can it help you make better quality of life decisions?

When most people think about financial planning, they imagine building wealth, saving for retirement, or hitting certain investment targets. But the heart of financial planning isn’t just about growing your money—it’s about using it to live the life you want. That’s where income targeting comes in.

So, what is income targeting?

Income targeting is a financial strategy that focuses on setting a desired income level—either now or in the future—and actively planning your finances around that goal. Instead of chasing the biggest possible salary or investment returns, income targeting is about building a sustainable, reliable income that supports your desired lifestyle.

It’s a shift from simply asking “How much money can I make?” to asking “How much money do I need to live the life I want?”

In Australia, income targeting is often used in retirement planning but we’re here to tell you: it’s just as useful at other stages of your life. 

If you’re planning a big career shift—changing tack like Chalie, considering a break, moving to part-time—or just dead certain we should all be working-to-live (rather than living-to-work), income targeting can be a great tool in your arsenal.

How income targeting works.

Income targeting isn’t about guesswork—it’s a deliberate, practical process, best done with the help of a trusted Financial Adviser. 

Broadly speaking, income targeting begins with understanding how much you actually need to live well, then building a plan that’s designed to deliver that income reliably and sustainably. 

Here’s how it typically comes together:

Set personal goals first.

Start by getting clear on what you value and what you want from life. What does a good life look like for you? What experiences, freedoms or choices matter most? Consider family, work, travel, flexibility, risk tolerance, and how you handle financial stress.

Getting clear on what you truly want from life helps ensure your financial goals reflect what you actually need—rather than just continuing with how things are.

Understand your spending.

Take stock of your spending—both now and into the future. Include essential costs like your mortgage, rent, bills and groceries, plus the fun stuff that brings you joy.

A detailed household budget that includes short, medium and long-term spending assumptions can help you set more realistic income targets. For example, you might need $100K per year while paying school fees, but only $40K per year once the kids are finished school.

Whatever stage you’re at, be sure to build in a buffer for inflation, rising living costs, and those inevitable unexpected expenses. Planning with an emergency fund in mind can help you absorb life’s surprises without derailing your bigger goals.

Set an income goal. 

Once you’re clear on your lifestyle and spending needs, you can set an income goal that truly supports the life you want. A trusted financial adviser can help you set, forecast, and understand the long-term impact of adjusting your income up or down.

Most importantly—remember this is your goal.

Not your neighbour’s, not your brother-in-law’s—yours. It’s easy to get caught up in what others are doing, but take the time to make sure your income target genuinely aligns with your values, spending habits, and your family’s needs.

Make changes to achieve your income targets.

Once your income goal is set, your financial adviser can help you explore the strategies and practical steps to get you there.

Align your career.

If you’re still working, this might mean chasing a promotion, changing jobs, or building extra income streams outside your main role. Equally, it could also mean scaling back, shifting to part-time or leaving a career that’s no longer serving you. 

When it comes to your work, income targeting is about making active, informed choices—not just accepting what’s handed to you.

Align your investments. 

With an income target in place, you may need to prioritise income-generating assets (like dividends, rental income, or annuities) over purely growth-focused investments to support your income strategy.

Boost your income in retirement.

If you’re retired, achieving your income targets might involve accessing government support (e.g. health care cards or the age pension). It might also include strategic withdrawals from your investments, super, or other income streams to support your desired lifestyle. These decisions should always be made in consultation with your financial adviser.

Consider tax and timing. 

It’s important to structure your income in a way that’s tax-effective and sustainable over time—so you can earn, contribute and draw the right amounts, at the right time, to meet your goals.

At Kearney Group, our financial advisers work in teams with our in-house tax advisers to ensure your strategy is considered from all angles.

Income Targeting is really a quality of life strategy.

At its core, income targeting is about giving you the confidence to make better life decisions and truly live your values.

When you know your money can reliably support the lifestyle you want—whether that’s taking a career break, working part-time, or booking that long-overdue vacation—you can actively make critical life choices without second-guessing yourself.

Rather than hustling to earn and save as much as possible, you’re focusing on what you actually need, when you need it, and building your plan around that.

Choose your own adventure with income targeting.

One of the best things about income targeting is that it’s not one-size-fits-all. You get to choose your own adventure. Because it’s your life after all.

And, as your goals, lifestyle or health needs change over the years, you can recast your strategy and target different income levels for:

• When you’re working
• During your transition to retirement
• When you’re in full retirement mode

In short – income targeting is just a much more human, life-centred way to do financial planning.

Final thoughts.

If you’ve ever felt that traditional financial planning is a little too focused on long-term lump sums, income targeting might be right up your alley.

It’s not about amassing the biggest pile of money. It’s about building the right income to fund the life you actually want to live.

And when you approach your finances this way, you’re in a much stronger position to make decisions that genuinely improve your quality of life.