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

Pre-retirement preparations in your 50s

It’s never too late to plan for retirement. Even when you step into your 50s, you still have a chance at getting your retirement plans and finances in order. Starting a retirement plan and catching up in your 50s will not be easy, and you have to give up thoughts of early retirement, but it’s still possible to save up for a simple retirement.

Unless you planned for an early retirement, you likely have a decade to 15 years to catch up and get your finances in order.

Review and adjust your retirement plan
You have a more realistic view of your finances and retirement lifestyle by the time you’re in your 50s. Consider reviewing the retirement plan you created in the previous decades to determine if they are still applicable or if adjustments are needed.

Look into the following aspects of your existing retirement plan during your review:

• Time horizon
  Will you still retire at the age you indicated or do you need to extend your employment?
  
  
• Health condition
  Are you in good shape physically and mentally? If not, will your treatments and/or medications eat up your budget for living expenses?
  
  
• Current lifestyle v planned retirement lifestyle
  Do you still wish to live the way your 20 or 30-year-old self envisioned your retirement?
  
  
• Source(s) of income in retirement
  Do you have other sources of income apart from super or will you be relying on age pension?

If there are aspects of your original plan that no longer fits your current situation, your 50s is the best time to make necessary adjustments.

You may also try living out your plan in your 50s so that you can slowly transition to your retirement lifestyle.

Review investment performance and strategy
Reviewing your fund and portfolio’s performance should actually be done regularly, but if this is something that you were not able to do, then it’s time to pay close attention to your investments in your 50s.

If you have aggressive or high-growth and high-risk assets, think about shifting to more conservative assets to reduce your exposure to risk and potential losses.

Investment professionals typically suggest owning your age in bonds, but you may also opt for other defensive assets to protect a larger portion of your portfolio as you age.

Consider sitting down with your fund manager or financial planner to discuss the best course of action for your investments.

Continue voluntary super contributions
People often underestimate their own longevity. And, for some, this costly mistake results in their retirement fund running out during their retirement years.

By continuing to contribute to super, you may increase the life of your retirement benefits.

Don’t stop making voluntary contributions to your super. There may be a $1.6 million transfer balance cap for accounts in the pension phase but there’s no enforced limit to the end balance of your super. Just make sure that you don’t exceed the annual concessional and non-concessional contributions cap.

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.