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

Catch up in your 40s

Planning closer to your retirement years may force you to double or triple your efforts in order to catch up to achieve your retirement goals. However, you can still achieve your dream retirement.

Assuming you started planning in your 20s or 30s, you need to revisit your retirement plan and objectives to determine if they still match your current circumstances. You also need to determine whether your objectives are still feasible considering your circumstances and remaining time frame.

Your 40s is the time to bring your retirement finances up to speed if you failed to plan early for retirement.

The 10-20 year delay would also mean either or both of the two things:

1. You may not be able to achieve the same returns due to a shorter time in the market.
2. You have to double up on your savings and contributions in order to catch up.

It may be more difficult to save up for retirement if you’re only staring out in your 40s, but it’s not impossible – you’ll just have to do the same things you were supposed to do in your 20s and 30s in a shorter span of time.

When you manage to get things in order, your focus in your 40s should be to clear bond debts, review your insurance cover and increase your savings and contributions for retirement.

Clear debts
The effects of debt on finances remains the same regardless of your age, so if you still have high-interest personal debt in your 40s, focus on paying them off right away.

Assuming you have cleared your non-bond debts, your 40s should focus on paying off your bond debts, such as loans for a residential or investment property.

You may work on making additional payments on your home loan so that you can fully own your home sooner. Doing so will free up some of your money to allocate for other uses, such as making voluntary contributions to super.

Review insurance cover
Your 40s is a time when your health and other personal circumstances may change, so make sure that your needs will be met no matter what happens by updating your insurance cover.

Review your current insurance and decide whether you need to update the cover to meet your current needs. Updating your cover can also ensure that your family will receive a sum of money to help them get by in case something happens to you.

Increase super and investment contributions
If you have freed up enough of your income, consider maxing out your super voluntary concessional and non-concessional contributions. Making voluntary super contributions or maxing out the contribution limits is a tax-effective way to grow your retirement money because super is taxed at only 15 per cent.

Contributing to super is still the most tax-effective way of investing for retirement at present, but bear in mind that legislations may change the current super laws and remove this benefit. For instance, the government may decrease voluntary contributions and pension withdrawal limits in the future.

As at fiscal year (FY) 2017-18, the concessional contribution limit is at $25,000 for all ages, while the non-concessional contribution limit is $100,000.

If you want to invest more money than is allowed by super laws, you may consider investing your money outside super – in a fund of your choice or a personalised investment portfolio. If you decide to manage your own portfolio, however, remember to do due diligence and make informed decisions.

You can lose part or all of your money from high-risk investments, so experts recommend being more conservative with investments as you approach retirement.

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.