Planning your retirement is about more than just money. A retirement plan helps you understand what you want to do, what you’ll need and steps to take to make it happen.
A good retirement plan reflects your lifestyle, adjusts to your changing needs and helps give you confidence that you’re prepared for the future.
1: Set your retirement goals
To start planning, ask yourself some key questions to help you visualise what retirement looks like for you. Set some clear goals.
When do you want to retire?
Your retirement timing could be based on many things, including:
- financial readiness
- personal health, or
- simply being ready to stop working
For many people, the timing of retirement may depend on their household situation, such as planning with a partner. For others, the decision can be out of their hands. But having a starting point in mind can help you plan.
How do you want to live?
Think about what your days will look like in retirement. Do you want to spend more time with loved ones, volunteer in the community, travel or explore hobbies? Retirement is an opportunity to shape your lifestyle around what matters most to you.
What does staying healthy in retirement look like to you?
Good health is a key part of enjoying retirement. For most people, staying active, eating well and managing stress are the main priorities. Your plan should consider how you want to prioritise your health, including through exercise, sports, or maintaining a healthy routine.
If you have specific health conditions, you might also consider what extra support you’ll need, and the costs involved.
Will you need to support others?
If you plan to help family members financially or provide care, that needs to be part of your planning. For some, this means supporting adult children. For others, it means helping with grandkids or lending a hand to ageing parents. Thinking through these commitments helps you plan.
What will work look like for you?
Retirement doesn’t always mean stopping work entirely. Some people choose to scale back to part-time or casual roles, while others may consult or freelance. Transitioning to retirement can help stretch your savings and keep you connected to your community. There’s no one right answer – it’s about what works best for you.
Where do you want to live?
Your housing plans are a major part of your retirement. Do you plan to stay in your current home, downsize or move somewhere different? For some, it’s about staying close to family, or even living with them. Other people hope to move to a location that better fits their lifestyle. See your home in retirement for more information.
2: Work out your financial position
To build your retirement plan, it’s important to get a clear understanding of your financial position.
Your lifestyle choices – where you live, how you spend your time and the experiences you want – are usually the biggest drivers of your costs in retirement.
Assess your assets and income
Take stock of what you own and the income you expect to receive in retirement.
- Superannuation: check your balance and consider finding and consolidating old accounts.
- Look at your personal savings: not everyone has assets outside super, but if you do, they also support your retirement plan. Include bank accounts and other investments, such as shares, managed funds and property.
- Government payments: depending on your age and circumstances, you may be eligible for government payments like the age pension, or other support such as pensioner concessions, health care benefits and tax offsets.
- Other income: if your income involves employment, or income from a business, think about how this might continue into retirement.
- Inheritance: If you are the beneficiary of a deceased estate, which might be for a family member or friend, you could consider the inheritance in your financial plans.
Find out more about retirement income sources.
Work out your financial position
Understand your living costs
Understanding your current spending habits will help you plan your future needs.
- Housing: rent or mortgage payments, rates, home and contents insurance, and maintenance costs
- Utilities: electricity, gas, water, phone, internet
- Food: fresh food, groceries, takeaway and dining out
- Clothing and household goods: clothing, personal care, furniture and household appliances
- Health and leisure: health insurance, healthcare, social activities, fitness, streaming services, holidays (including travel insurance) and gifts
- Transport: car registration, insurance and running costs, as well as public transport
For more guidance and information, see work out how much you need to retire.
Build your retirement income
Knowing your financial position and likely living costs allows you to work out if your expected income will match your retirement needs. Taking action early can make a big difference to you later.
Here are some options you might think about.
- Change your retirement age: working a little longer so you can continue to earn an income and contribute to super.
- Make extra super contributions: if you can afford it, consider increasing your super contributions while you are working. This can boost your retirement income and may help you save tax.
- Review investments, performance and fees: high fees and poor performance can have a big impact on your retirement income.
- Review your super investment mix: it may have been some time since you last reviewed your investment mix. If you are close to retirement, consider whether your current investment mix is right for you. For example, a more conservative investment mix for your super may help to reduce short-term fluctuations to your super balance, however, may have lower returns over the long-term. See super investment options.
- Explore government support: in retirement, the Age Pension and other government benefits are there to help if you need. Support is also available while you are still working that may help your budget stretch further.
- Keep working part time: many retirees choose to transition to retirement and work reduced hours to supplement their income.
- Pay down debt: Consider how you might clear debt before retiring. If you own a home, this may include downsizing to free up cash.
- Review current living expenses: consider cutting down costs to divert funds elsewhere, for example needing a second car or work-related expenses.
- Decide how much to draw from super: The government has minimum drawdown rates for super, but you can set your own drawdown rate above the minimum.
- Consider seeking advice: if you are unsure, you can talk to your super fund, a financial adviser, or Services Australia’s free financial information service.
Mack takes steps to plan his retirement income
Mack is in his 50s and just starting to think about retirement. He’s worried about his super balance and paying off the rest of his mortgage. Mack reads Moneysmart’s content on retirement income and discusses it with his wife. They discover that they are in better shape than he thought and make a plan to contribute more to super while they’re still working. They also realise that as they get older, the Age Pension will be available to help support their plans for a comfortable retirement.
Work out how your super will help build your retirement income.
3: Plan for different life stages
Retirement is not a single life event – it evolves over time. Your needs and priorities will change as you move through life’s different stages.
Not everyone’s plan will look the same. For some, super and personal savings will be the main source of income. For others, government support like the Age Pension will play a bigger role.
Regardless of where you start, understanding how retirement unfolds can help you stay prepared and confident.
Early-stage retirement
The early years of retirement are often the most active. This is the time when you may choose to travel, take up new hobbies, or spend more time with family and friends. With fewer work commitments, there’s more room to focus on what brings you joy and purpose.
In this first stage of retirement, plan for:
- Setting up your income: this is when you will begin to draw on your savings. Getting the balance right is important to make your money last.
- Adjusting your budget: moving from full-time income to retirement income is an adjustment. Budgeting carefully, especially if the Age Pension is your main source of support, can help prevent surprises.
- Exploring part-time work: For some, part-time work isn’t just about extra cash - it’s a way to stay connected.
- Big-ticket items: If you plan to make large purchases or travel, it’s important to plan and budget for these early. If you’re planning to draw an income from your super, consider how the cost of these larger items will impact your balance.
- Reviewing estate plans: Make sure your will, powers of attorney, and super beneficiary nominations are up to date. This helps avoid legal complications and ensures your wishes are respected. Set a reminder to regularly review, and keep these up to date throughout retirement.
Middle retirement
As you move deeper into retirement, the focus shifts to fully living your retirement lifestyle. For many, this is the most rewarding phase with new routines, a settled rhythm and the space to truly enjoy the freedoms that retirement offers. At this stage, spending may start to decline.
In the middle stage of retirement, plan for:
- Community involvement: this is when many people get more involved in their local communities, volunteering or contributing in a way that keeps them connected.
- Personal growth: retirement offers the opportunity to explore interests that may have been set aside during your working years, like learning a new skill or diving deeper into a hobby.
- Social connections: staying connected with family and friends, joining clubs and participating in community events can help maintain strong social bonds.
- Health and well-being: fully enjoying retirement relies on maintaining physical and mental health. Staying physically active can pay off through a higher quality of life.
Later-stage retirement
In the later years of retirement, the focus is on stability, security and maintaining quality of life. This stage is about enjoying the routines and connections you’ve built, while planning for health and legacy considerations.
In the later stage of retirement, plan for:
- Maintaining financial security: Review your income streams and budget carefully to ensure your savings last. Understanding government support options like the Age Pension can help maintain stability.
- Aged care and in-home assistance: Explore your options early so you understand the costs and services available if you need them. Planning ahead can make transitions smoother.
- Considering legacy planning: Think about what you want to leave behind, whether it’s financial support for family, charitable donations, personal memories and stories.
- Getting help if you need it: You may need help from your family or support network to make big decisions. You can also seek support from government sources, community organisations or charities if you need help to manage money or other challenges.
4: Change your plan as your life changes
Retirement isn’t a fixed path. Life changes, and your plan can change with it. Regularly reviewing your financial position, lifestyle and health needs ensures you remain on track.
Unexpected events like changes to the value of your super, health events, or changing family obligations can change your circumstances, and being flexible allows you to adjust without losing control.
Adapting your plan might mean rethinking your budget, rethinking your investment strategy, or exploring new sources of income.
Staying informed about changes to super and government benefits can help you make decisions with confidence.
5: Get help if you need it
If you’re unsure about how to manage these changes, consider seeking advice from trusted sources such as a family member or friend, your super fund, a licensed financial adviser, or Services Australia’s free Financial Information Service.
Key actions you can take
- Make a list of your retirement goals, and what you want to do for each stage of retirement.
- Review your financial situation and options for retirement income.
- Check if you might be eligible for the Age Pension.
- Decide if you need to make changes to your plan to make your retirement more comfortable, including delaying the date you stop working, changing your super investments and fees, or picking up part time or casual work.