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 be prepared to 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 could be a factor in considering whether you need to increase your savings.
  
  
• Where do you plan to retire?
  Will you be staying in our 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.

For starters, you should have an idea of the kind of retirement lifestyle you want, as well as the age at which you wish to retire. Knowing these two can help you estimate how much you need to save for your retirement fund.

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

Wrapping up in your 60s

While there’s no specific retirement age in Australia, many employed Australians tend to retire in their mid-60s. Even if you plan to retire in your 70s or older, your 60s is a good time to start wrapping up.

Once you reach your senior years, think about the actual retirement phase in your retirement plan and determine the best way to execute it.

Determine your next steps with regard to employment
You may continue to work in a full-time or part-time capacity in your senior years even if you have already reached your preservation age. Continuing to work in your senior years is one way to increase your super balance.

According to super laws, employers are still required to pay the super guarantee for employees until they are 75 years old if they pass the work test. To satisfy this test, you must:

• Be gainfully employed on a part-time or full-time capacity
• Work at least 40 hours within 30 consecutive days
• Not be subject to SG exemptions

You may also continue voluntary super contributions until you turn 75 years old if you meet the work test.

Plan out your finances for withdrawal

Consult a licensed financial planner or investment professional on how to best transition the assets in your portfolio(s) for retirement. It’s crucial for your retirement portfolios to focus on capital preservation once you reach 60 because a significant loss from high-risk assets at this point will be incredibly difficult to earn back.

Likewise, you need to discuss how to expedite your retirement benefits to increase its longevity. Planning you withdrawals is also necessary if you plan to claim part age pension because of the income test.

Exercise caution in retirement
Once you fully retire and rely on super and other retirement income, it’s best to be careful with your finances so you can enjoy your nest egg.

Many investment scammers specifically target retired seniors out of their retirement money, so it’s best to exercise caution when looking at investment offers. Stay updated on the various scams targeting Australian seniors and report potential scammers to the Australian Securities and Investments Commission.

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.