5 simple steps to start retirement planning at any age

The sooner you start planning, the easier it can be to retire on your terms.
Retirement planning involves lots of steps but you can start at any stage.Getty

Retirement planning can be one of those things we put off until the last minute. But there are so many factors to consider than having a plan sooner can make a big difference in retirement.

Especially when you consider that retirement is something we technically start moving towards as soon as we get our first job and superannuation account.

“Retirement planning starts as soon as you start working,” financial adviser and author Drew Meredith tells The Australian Women’s Weekly.

“The sooner you are engaged, even in a small way, the sooner you can make better decisions.”

After decades of providing financial advice to Australians, he and certified financial planner Jamie Nemtsas wrote The Golden Years: How to plan a happy and financially secure retirement as a resource and guide for people.

“While Australia has some of the most progressive retirement and savings systems in the world, the level of financial literacy remains incredibly low,” they said when it was launched.

This is backed up by research, including a comprehensive government report from November 2020 that revealed 68% of Australians had never estimated how much they would need for retirement.

Most people (46%) said this was because “retirement was a long way off”. But 20% also said they wanted to plan for retirement “but haven’t got around to it”.

It also found women are less likely to have a retirement plan. And with the income and superannuation gap, that makes it even more important to start planning as soon as you can.

So, with that in mind here are 5 steps you can take to make retirement planning easier at any life stage.

Retirement planning can start at any age and helps set you up for the future.

1. Decide what age you want to retire

This step gives you a clear goal to work towards when you’re employed. A couple of key milestones to consider:

  • You can access superannuation once you reach 60 or the Preservation Age if you retire or set up a transition to retirement plan
  • You can access super and continue working once you reach 65 years of age
  • You can apply for the Age Pension once you are 67 and meet the requirements

It’s also possible to retire early if you have the right plans in place.

Drew Meredith says it’s important to consider how much is being contributed to your superannuation.

“Find all the little free kicks that can add up. Look at the co-contribution and spouse contribution options,” he suggests.

“Make sure you are using the concessional contribution limits, or even the catch-up concessional contributions.”

These are contributions you make from your pre-tax income through salary sacrificing and other contributions. They’re taxed at 15% which means they can help you save on income tax and increase your super balance.

If you want to consider it as part of your retirement planning process, check the Australian Taxation Office (ATO) website details or speak to a financial advisor.

2. Consider what you want to do in retirement

Whether it’s jet setting around the world or pottering in the garden, retirement planning can help ensue you have the money for it.

Drew says people should imagine the ideal retirement scenario, then consider their current accounts.

“What level of income do you need to support the retirement you want? And how does this compare to what you have in place today.”

If you want to continue living in a similar way to when you were working, a general guide is to aim to have around two-thirds of your current income in retirement.

The Association of Superannuation Funds (ASFA) Retirement Standards is another guide for how much you need to retire.

The AFSA has even created a retirement tracker tool you can use to check how your current super balance lines up with your plans.

3. Think about your other assets and investments

One of the biggest assets to consider is your home. Retirement planning guides and income benchmarks often assume you will own your home outright when you retire.

So, if you’re not a homeowner, you will need more money when you retire to help pay for rent or other accommodation.

It’s also worth considering how other assets and investments could help fund your retirement.

For example, an investment property could give you income through rent or a sale. You could also consider exchange traded funds (ETFs), shares, savings and other investments.

Just keep in mind that some investments are riskier than others. And you typically want lower-risk options as you near retirement.

There are plenty of resources that can help you plan for retirement.

4. Plan how to pay off debts

Starting retirement without debts will make it much less stressful. So, it’s important to consider your whole financial situation in the years (and decades) before you retire.

Some of the most common include:

  • Home loans
  • Investment property loans
  • Personal loans
  • Credit card debt

Unfortunately, for a lot of Australians debt may follow them into retirement. Research from AMP in 2023 found one in nine Australians expect to have more than $250,000 in unpaid debt when they retire.

“While home values and super balances are increasing, research shows that more and more Australians will be retiring with increasing levels of household debt, leaving more retirees exposed to interest rate fluctuations, and presenting an evolving challenge in financial planning for retirement.”

AMP Director, Retirement, Ben Hillier

The sooner you can repay debts, the easier retirement will be. Especially when it comes to having all the funds you need.

But if you’re nearing retirement, you could consider using superannuation or other funds to pay off debt. Another option AMP noted was downsizing to a smaller, more affordable property.

You could also consider speaking to a financial planner about your situation.

If you’re experiencing financial stress, you can also contact the National Debt Helpline in 1800 007 007 for free financial counselling.

5. Prepare for the future

Retirement planning is also about considering what’s next, both for yourself and your family.

As Drew says, people “also need to consider legacy and estate planning, and what happens when they are gone.”

A simple place to start is with a will, or a ‘when I die’ file. It can also help to discuss plans and scenarios with your family.

Another big factor to consider is where you want to live and how practical your home is for ageing in place (if that’s what you want). Or what type of aged care you would prefer.

While these details can be difficult to consider, having a plan takes the pressure off everyone if something happens. That also means you can get on with enjoying your life when you retire.

*This article contains general advice only and may not be suitable for your circumstances. Make sure you seek financial advice appropriate to your individual circumstances before making decisions.

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