Retirement planning is a lifelong journey that requires different strategies and priorities at different life stages. This comprehensive guide breaks down what Australians should focus on at every age to ensure a comfortable and secure retirement.
Your 20s: Building the Foundation
Your twenties are the perfect time to establish strong retirement planning habits, even though retirement seems a lifetime away. The power of compound interest means that even small contributions made in your twenties can grow substantially over four decades.
When you start your first job, your employer will begin making compulsory superannuation contributions of 11.5% of your ordinary earnings (as of 2025). While this might seem like a small amount, don't underestimate its long-term value. Consider making additional voluntary contributions if your budget allows, as these can be tax-effective and significantly boost your retirement savings.
This is also the time to understand your super fund options. Compare fees, investment returns, and insurance coverage across different funds. High fees can erode hundreds of thousands of dollars from your retirement savings over a lifetime. Choose a fund that aligns with your risk tolerance and life stage, and consolidate any multiple super accounts you might accumulate from different jobs to avoid paying multiple sets of fees.
Insurance within super is another crucial consideration. Most super funds provide default death and total and permanent disability insurance. Review this coverage to ensure it's adequate for your circumstances, but also be mindful that insurance premiums come out of your super balance. If you're young and healthy, you might opt for basic coverage and increase it as your responsibilities grow.
Your 30s: Accelerating Growth
Your thirties typically bring increased earning capacity alongside growing financial responsibilities like mortgages and children. This decade requires careful balance between meeting immediate needs and maintaining strong retirement contributions.
If you receive salary increases or bonuses, consider directing a portion toward salary sacrifice arrangements. Salary sacrificing into super can be tax-effective, as contributions are taxed at 15% rather than your marginal tax rate. For someone in the 32.5% tax bracket, this represents significant savings. The annual concessional contributions cap is $30,000, which includes employer contributions, so plan accordingly.
Review your super investment strategy during this decade. With 30+ years until retirement, you can typically afford to take on more investment risk for potentially higher returns. Consider growth-oriented investment options rather than conservative balanced funds. Your super fund should offer various investment options tailored to different life stages and risk appetites.
This is also an ideal time to seek professional financial advice. A qualified financial advisor can help you develop a comprehensive retirement strategy that considers your super, other investments, property, and insurance needs. They can also help you understand the trade-offs between paying off your mortgage faster versus maximising super contributions.
Your 40s: The Critical Decade
Your forties are often your peak earning years, making this the most critical decade for retirement planning. The decisions you make now will significantly impact your retirement lifestyle. With 15-25 years until retirement, you still have time to recover from setbacks but need to be more strategic than in earlier decades.
Maximise your concessional contributions if possible. The $30,000 annual cap allows substantial tax-effective contributions. If you haven't fully used your cap in previous years (since 2018-19), you may be able to make catch-up contributions using unused cap amounts, provided your total super balance is below $500,000.
Consider spouse contributions if one partner earns significantly less or takes time out of the workforce. Contributing to your spouse's super can be tax-effective and helps ensure both partners have adequate retirement savings. You may be eligible for a tax offset of up to $540 for spouse contributions.
Review your insurance needs comprehensively. Income protection insurance becomes increasingly important as your earnings grow and your family's financial dependence on your income increases. Ensure your death and TPD insurance covers outstanding debts and would provide for your dependents' ongoing needs.
Start calculating retirement income projections. Use the Association of Superannuation Funds of Australia (ASFA) Retirement Standard as a guide. As of 2025, ASFA estimates a comfortable retirement requires around $70,000 annually for couples and $50,000 for singles. Compare this with your projected super balance and identify any shortfall early enough to address it.
Your 50s: Refinement and Strategy
Your fifties mark the beginning of the home stretch toward retirement. This decade requires more detailed planning and potentially more aggressive saving strategies, as retirement is now clearly visible on the horizon.
Understand your preservation age—the earliest age you can access your super. For most Australians currently in their fifties, the preservation age is between 55 and 60, depending on birth date. Once you reach preservation age and retire, you can access your super as a lump sum or income stream.
Consider transition to retirement (TTR) strategies if you're still working after reaching preservation age. A TTR pension allows you to access some super while continuing to work, potentially reducing working hours without significantly reducing income. You can draw between 4% and 10% of your super balance annually while continuing to work and make contributions.
Make catch-up contributions if you haven't maximised super contributions in earlier years. The bring-forward rule allows you to make up to three years of non-concessional contributions (currently $120,000 per year) in a single year, up to $360,000, subject to eligibility criteria.
Begin detailed budgeting for retirement lifestyle. Calculate expected expenses, including healthcare, travel, hobbies, and potential aged care costs. Be realistic about lifestyle expectations and ensure your super savings can support them. Don't forget to factor in that you'll likely be paying off a mortgage or have paid it off, significantly reducing housing costs.
Your 60s: The Transition Phase
Your sixties are typically when retirement transitions from planning to reality. This decade requires careful decision-making about when to retire, how to access super, and how to manage the Age Pension if eligible.
Determine your optimal retirement age. While the Age Pension eligibility age is 67, you might choose to retire earlier using super, or continue working longer to boost savings. Working even a few extra years can dramatically improve retirement outcomes, as your super continues growing while you delay drawing on it.
Understand Age Pension eligibility and how it interacts with your super. The Age Pension is means-tested against both income and assets. Your family home is exempt from the assets test, but super in accumulation phase counts toward both tests. Once you turn 67, super in pension phase is assessed under deeming rules for the income test.
Consider the tax advantages of retirement phase. Once you turn 60, income from super pensions is tax-free, and withdrawals from taxed super funds are also tax-free. This makes super an incredibly tax-effective vehicle for retirement income. Earnings within super pension accounts are also tax-free, unlike accumulation accounts where earnings are taxed at 15%.
Plan your super drawdown strategy. You can take super as a lump sum, account-based pension, or combination. Account-based pensions provide regular income while keeping your money invested, potentially continuing to grow. You must draw minimum percentages annually, which increase with age, starting at 4% and rising to 14% for those aged 95 and over.
Review your aged care planning. While you might not need aged care for many years, understanding the costs and funding options helps with overall financial planning. The family home and certain amounts of super may be exempt from aged care means testing, but rules are complex.
Your 70s and Beyond: Enjoying the Fruits of Planning
If you've planned well, your seventies should be about enjoying retirement rather than worrying about money. However, continued financial management remains important to ensure your savings last throughout retirement.
Regularly review your super pension drawdown rates. Minimum drawdown requirements increase with age, but you don't want to deplete your super too quickly, especially if you're receiving partial Age Pension. Balance the need for current income with ensuring sustainability over a potentially long retirement.
Monitor Age Pension entitlements. As your super balance decreases through drawdowns, you may become eligible for higher Age Pension payments or newly eligible if you weren't before. The assets and income tests change annually with indexation, so regular reviews ensure you're receiving full entitlements.
Consider downsizing your home. The downsizer contribution scheme allows Australians aged 55 or older to contribute up to $300,000 per person ($600,000 per couple) from home sale proceeds into super, outside the normal contribution caps. This can be particularly beneficial if you're receiving Age Pension, as downsizer contributions don't count toward the Age Pension assets test for 12 months.
Keep an eye on investment strategy within your super. While you want to preserve capital in retirement, being too conservative can mean your money doesn't keep pace with inflation. Many retirees maintain some growth assets in their portfolio to ensure longevity of their retirement savings.
Key Numbers to Remember
Several key ages and amounts affect retirement planning for Australians:
- Preservation age (55-60): Earliest age to access super
- Age 60: Tax-free super withdrawals begin
- Age 67: Age Pension eligibility age
- Concessional cap: $30,000 per year
- Non-concessional cap: $120,000 per year
- Transfer balance cap: $1.9 million (total super in pension phase)
Common Retirement Planning Mistakes
Avoid these frequent pitfalls that can derail retirement plans:
Starting too late: The single biggest mistake is not taking retirement planning seriously in your twenties and thirties. Compound interest works powerfully over long timeframes, and lost time can never be recovered.
Not consolidating super accounts: Multiple super accounts mean multiple sets of fees and insurance premiums, eating into your balance. Consolidate accounts unless there's a specific reason to maintain separate accounts.
Paying too much in fees: Even differences of 0.5% in fees can cost tens of thousands of dollars over a career. Compare funds regularly and switch if you're paying above-average fees without corresponding performance.
Wrong investment strategy: Being too conservative when young means missing growth opportunities. Being too aggressive close to retirement risks capital loss you don't have time to recover from. Adjust your strategy as you age.
Not considering insurance adequately: Either having too much (wasting money on unnecessary premiums) or too little (leaving family financially vulnerable) can be problematic. Review insurance regularly as circumstances change.
Conclusion
Retirement planning is not a one-time event but a lifelong journey that requires different strategies at different life stages. By understanding what to focus on in your twenties, maximising contributions in your peak earning years, and making smart decisions as retirement approaches, you can ensure a comfortable and financially secure retirement.
The Australian retirement system, combining compulsory superannuation with the Age Pension safety net, provides a strong foundation for retirement. By engaging actively with your super, making additional contributions when possible, and seeking professional advice at key life stages, you can build the retirement lifestyle you envision.
Remember, it's never too late to start planning. Even if you've started late, making informed decisions from today forward can significantly improve your retirement outcomes. Use age calculators to understand exactly where you stand in your retirement planning timeline, and take action appropriate to your current life stage.