Your responsibilities, income, needs and goals change in each decade of your life, and achieving financial security in retirement is a long-term endeavour. It’s important to review your retirement portfolio regularly to ensure that it is in line with your objectives and current circumstances. 

Experts believe that it’s never too early or too late to work on retirement plans. However, your personal circumstances in each decade of your life changes, which is why you should also change your focus.

To better guide you on what you need to focus on in each decade of your life, you need to determine how feasible your plans are considering your current situation.

Identify core aspects of your retirement

The first thing you need to do is to identify the 5Ws and 1H of your retirement.

• What kind of retirement lifestyle do you want?
  Do you want a modest, comfortable or lavish retirement? Figuring out the retirement lifestyle you want will help determine the amount of retirement funds to aim for.
  
  
• When do you intend to retire?
  Will you retire early, late or when you reach your pension age? This, along with your current age, determines your time horizon.
  
  
• Who is part of your retirement?
  Are you retiring as a single pensioner or do you have a spouse? If you have a spouse, do they have enough in their own super? Will either or both of you need special healthcare service? This decides whether you need to increase your savings.
  
  
• Where do you plan to retire?
  Will you be staying in your family home, in a retirement village or facility? Perhaps you may also be considering retirement overseas. Where you plan to reside may affect the amount of money you will actually need in retirement.
  
  
• If you plan to retire early, why will you retire?
  Are there underlying health reasons or will you simply be pursuing something else? This should determine if you need to increase your money goal.
  
  
• How do you plan to secure your finances for retirement?
  Will you simply maximise your super or will you secure other investments to generate more income? Your investments can affect the final amount of money you will have in retirement.

You need to answer all the questions above to create a full retirement plan, but you don’t necessarily need to have all the answers to get started. The most important aspect when it comes to retirement planning is having an objective to work towards.

Decade-by-decade retirement planning

The two most important questions you need to answer before drawing up a plan is your “what” and “when” because these will give you an idea of your goals and time horizon. The rest of the questions will help you determine whether there is a need to adjust your retirement plan.

Here’s what you need to focus on in each decade of your life from your 20s up until your 60s.

• 20s: Planning and preparation
• 30s: Adjusting plans
• 40s: Catching up
• 50s: Winding down and pre-retirement preparations
• 60s: Wrapping up

Adjust your retirement plan in your 30s

You may have been working on a full-time capacity for at least five years before reaching 30 years of age or you may have a different work arrangement. Regardless of your circumstances, you need to review your retirement plan and determine whether your objectives have changed.

Re-evaluate your goals
Your 30s is the time to re-evaluate your answer to the “what” and “when” questions in your 20s, as well as formulate an answer to the “who” and “where” questions. These should give your retirement planning a more concrete image.

Your personal circumstances and goals may already have changed in your 30s. It’s possible that you begin to think about marriage or having kids – if you don’t already have a growing family.

By the time you reach your 30s, your income may already be higher than when you were just starting out with your career in your 20s. This means it’s also a good time to allocate a larger amount of your income to clear debts, allocate funds for other financial goals and increase super contributions and make additional investments.

It may become more difficult to manage expenses and save money apart from the superannuation guarantee from your employer. While it is best to start making additional investments earlier in your career, you can still maximise the benefits of time value of money (TVM) if you invest in your 30s. 

Clear debts
One of the worst things to deal with when you’re trying to save is having a large amount of debt – especially those with high interest, such as credit card debts. However, you may retain some necessary bond debt such as a home loan.

If you have an existing personal debt, the best thing to do is to get rid of it as soon as possible first. Pay all your non-bond debts so that you can start with a clean slate with your savings. Otherwise, the interest from debt may bubble and force you to use your savings to pay it off.

Save for other financial goals
Once you are clear of high-interest debt, you also need to increase your savings for other financial goals that are important to you and your family.

These goals may be something as simple or short-term as saving for a family holiday or house repairs or something long-term, such as buying a family home or allocating savings for your child or children’s schooling.

Likewise, you may wish to increase the amount of money in your emergency fund so that it reflects your current income.

Increase super contributions
Another thing that is advisable to do in your 30s is to increase or maximise your super contributions through salary sacrifice or non-concessional contributions. Just like investing in your 20s, contributing more in your 30s can mean tens of thousands of dollars in additional retirement benefits as a result of TVM.

If your spouse also has a super fund and their income and super balance are less than yours, consider contributing in their behalf so that both of your retirement funds benefit from TVM. If it’s the other way around, your spouse may arrange to contribute to your super in your behalf.

Not only that, you or your spouse may also be eligible for a tax deduction under the current super laws.

Make additional investments
Your super can help you build an ample nest egg for a decent retirement living if chosen wisely and consistently funded; however, most experts also recommend investing outside of super.

Remember that superannuation laws can change depending on the government – as evidenced by several policy changes such as the contributions and transfer balance cap. The existing super laws may change by the time you retire and the income you receive may no longer be enough to achieve the lifestyle you prepared for.

To ensure that future policy changes wouldn’t severely impact your benefits in retirement, an investment portfolio outside of super may be a good way to supplement your retirement income.

It will be for you to decide whether you wish to hire an investment professional who will manage the portfolio for you or you will manage it yourself. If you decide on a do-it-yourself (DIY) portfolio, however, you should do due diligence and be selective with the assets to include in your portfolio.

If you can’t commit to a DIY retirement plan and execution, consider seeking the advice of a licensed professional who can help you with each step of the process.