• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

SuperGuide

Superannuation and retirement planning information

  • SuperGuide Premium
  • Account
  • Log In
  • SuperGuide Premium
  • Account
  • Log In
  • How super works
    • Super for beginners
    • Super rules
    • Employers guide to super
    • Super contributions
    • Super and tax
    • Accessing super
    • Super news
    • Women and super
    • Super tips and strategies
    • How-to guides
    • Super quizzes
    • Superannuation Q&As
    • Superannuation glossary
  • Super funds
    • Best performing super funds
    • Super fund rankings
    • Best performing pension funds
    • Pension fund rankings
    • Super fund average returns
    • Super investing strategies
    • Comparing super funds
    • Choosing a super fund
    • Choosing an investment option
    • Super fund fees
    • Insurance and super
    • Super fund profiles
  • SMSFs
    • SMSFs for beginners
    • SMSF administration
    • SMSF checklists
    • SMSF compliance
    • SMSF investing
    • SMSF pensions
    • SMSF strategies
    • SMSF Q&As
  • Plan your retirement
    • Retirement planning for beginners
    • When should I retire?
    • How long will I live?
    • How much super do I need?
    • Will I get the Age Pension?
    • How much will I spend in retirement?
    • Financial advice
    • Retiring overseas
    • Preparing for retirement
    • Retirement planning strategies
    • Retirement calculators and reckoners
  • In retirement
    • Income in retirement
    • Super lump sums
    • Super pensions
    • Age Pension
    • Working in retirement
    • Life in retirement
    • Senior concessions and services
    • Aged care
    • Estate planning
    • Super death benefits

Home / Plan your retirement / Retirement planning for beginners / What should my retirement plan contain, and can I write it myself?

What should my retirement plan contain, and can I write it myself?

February 18, 2021 by Nicole Small Leave a Comment

Reading time: 5 minutes

On this page

  • When should I retire?
  • But wait, what is ‘retirement’ anyway?
  • How much money will I need?
  • What have I got now and how might it grow?   
  • Addressing gaps and boosting savings
  • The bottom line

If retirement beckons and you haven’t yet given it much thought, then you’re probably aware you need a plan. But what should a retirement plan contain? And do you need professional advice, or could you handle it yourself?

The good news is that it’s not difficult to create a basic retirement plan yourself, even if only to help you figure out what questions to ask a professional financial adviser.

At its simplest, retirement planning boils down to figuring out:

  • How much you need to spend and would like to spend in retirement
  • Your current savings and whether they are on track to provide what you need in future
  • If a gap exists, what strategies are available to help you boost your savings.  

Keep coming back to that simple framework if you find yourself getting lost or bogged down in details as you learn. 

For our purposes here, we’ll just look at the main principles of the financial side of retirement planning but remember, true wellbeing in retirement requires a holistic mindset that encompasses health, social connection, relationships and a sense of purpose.

When should I retire?

There’s no fixed retirement age in Australia. It can and should be a very personal decision based on your financial circumstances as well as things such as your desire to pursue other interests, your energy levels and the amount of satisfaction you gain from interaction with work colleagues. But the age-based milestones most people like to know about involve when they might access super and/or government support. 


Advertisement
SuperGuide Premium is ad-free
  • Accessing super: We can all access super at age 65, or you may meet a condition of release prior to that, such as changing jobs after age 60 or retiring after your preservation age. 
  • Age Pension: Some people may be eligible for part or full Age Pension once they:
    • Reach their Age Pension age (for most of us, it’ll be between 66 and 67 years of age)
    • Satisfy the Income and Assets tests, and the Australian residency requirements.

But wait, what is ‘retirement’ anyway?

Great question, this concept is evolving. The lines are blurring between work and retirement, with many people taking advantage of flexible work options to gently ease out of the workforce. Below we’ll look at how this can even have a financial advantage. 

How much money will I need?

Before trying to estimate any kind of grandiose lump sum figure, it’s important to work out how much annual income you’re striving for, and how long you may need to make it last.

1. Generalisations

Those eager to visualise a target annual income right out of the gate may like to start with the two-thirds rule of thumb. This suggests that somewhere between 66–80% of pre-retirement income is a good general goal to keep your lifestyle similar to how it is now. Be aware, though, that this assumes your expenses will go down as you age, your mortgage is fully paid and other best guesses that may or may not be applicable to you.   

The Association of Super Funds of Australia (ASFA) produces a regularly updated budget that helps monetise a ‘modest’ or ‘comfortable’ retirement for both couples and singles. You may have already come across the ASFA Retirement Standard that states, for example, that a couple will require $44,440 per year to live a modest lifestyle, or $62,083 per year to live a comfortable lifestyle. 

These generalisations are a good place to start thinking, but remember, the more detailed and specific to your own circumstances you can get with planning, the greater chance of certainty (and the peace of mind that comes with that). 

2. More personalised estimates

Getting more precise involves some of the same thinking as when we do a budget. Start by considering what kind of lifestyle you might want. A simple benchmark may be to live in much the same lifestyle as you currently do. So if your current lifestyle includes discretionary pleasures such as holidays, cinema, restaurants, hobbies and so on, go ahead and enjoy the fun step in retirement planning and allow yourself to dream a little. What do your discretionary pleasures cost per week or per year? Don’t forget selfless pleasures like charities you would like to continue supporting or helping hands you want to give grown children.

Then we look at what else you might be spending money on in retirement. Those still paying a mortgage as they reach retirement (an increasing trend) will face a different reality than those who have cleared this (and any other debt that isn’t attached to wealth creation).

Other costs will depend on your preferences but you may like to factor in upgrading a car and furniture at certain intervals, plus other home maintenance costs. Then of course there will be expenses such as utilities, food, clothing, transport and insurance. Consider also that spending habits will fluctuate over retirement, with more pleasurable spending in the younger active years and greater emphasis on healthcare and aged care in the later, more frail years. 

3. Life expectancies

Population life expectancy tables are based on birth and gender only, and don’t take into account factors such as your lifestyle or genetics, but they may be helpful in estimating how long your money may need to last. You can take a look at life expectancy at age 65 or try our Life Expectancy Calculator.  

What have I got now and how might it grow?   

Now before you go ahead and simply multiply two-thirds of your pre-retirement income by your possible life expectancy to reach a lump sum amount – which may startle you! – the good news is you can consider how your money is invested and how it may be able to grow over time all by itself. 

Compare super funds

Read more...

Advertisement

Start by trying out a retirement calculator such as the MoneySmart Retirement Planner to see what your super balance at retirement might be and what retirement income you might be able to expect.  It even includes your estimated Age Pension entitlement.

MoneySmart’s Retirement Planner allows you to adjust the annual return you expect to earn on your super. So keep in mind that the years immediately before and after retirement are when many people reassess their investment strategy to minimise large fluctuations at a vulnerable time.

At this point you should also factor in investments you hold outside of super that may either be income-producing and/or an asset you can sell later at an increased value.

Addressing gaps and boosting savings

In addition to super’s ability to grow all by itself through a sound investment strategy, there are other ways to boost your super:

  1. Contributions can be powerfully effective the earlier we start, thanks to super’s compounding returns and lenient tax treatment. Consider salary sacrifice or spouse contributions if your circumstances allow. 
  2. Find and combine super to help minimise duplicate fees and insurance premiums.
  3. Consider a Transition-to-Retirement (TTR) strategy. Between the ages of 55 to 60, a TTR strategy allows you to supplement reduced income as you cut back on working hours by drawing on some of your super while you continue working. It can be combined with salary sacrifice contributions to boost super in a tax-effective way leading up to full retirement.

The bottom line

Learning the key components to nut out a retirement plan for yourself is empowering and can help you ask the right questions. However, it’s wise to consider seeking financial advice. An adviser can help you develop a detailed plan that takes into account all your assets and potential sources of retirement income and rigorously stress-test ideas.

Want to plan your retirement but not sure where to begin?

Become a SuperGuide Premium member and access independent expert guidance on how to plan your retirement, including how much super you need, how long you are likely to live for, whether you could be eligible for the Age Pension, the implications of retiring at different ages, how to prepare for retirement and much more.

Includes performance rankings for 235 super funds and 166 pension funds, more than 600 articles, how-to guides, checklists, tips and strategies, calculators, case studies, quizzes and a monthly newsletter.

Find out more


Learn more about how to plan your retirement in the following SuperGuide articles:

How to use the MoneySmart Retirement Planner

January 21, 2021

Countdown to retirement: Tips to help kickstart your retirement plans

June 1, 2020

How to plan for your retirement

January 4, 2020

How to plan your spending through the 3 stages of retirement

August 10, 2019

How to navigate the different phases of retirement

August 9, 2019

How to select a retirement income calculator

August 1, 2019

Starting a pension from your super

July 1, 2019

How do I apply for the Age Pension?

July 1, 2019

Super advice: How to find a suitable financial adviser

March 15, 2019

Learn more about Retirement planning for beginners in the following SuperGuide articles:

What age should I retire?

December 1, 2020

Your home: The foundation of retirement planning

November 24, 2020

Countdown to retirement: Tips to help kickstart your retirement plans

June 1, 2020

How much super do I need to retire?

February 11, 2020

How long you can expect to live, and what it means for your super

January 14, 2020

How to plan for your retirement

January 4, 2020

Related topics

Plan your retirement Retirement planning for beginners

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

© Copyright SuperGuide 2009-21. Copyright for this article belongs to SuperGuide Pty Ltd, and cannot be reproduced without express and specific consent. Learn more

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

How super works
Super for beginners
Super rules
Employers guide to super
Super contributions
Super and tax
Accessing super
Super news
Women and super
Super tips and strategies
How-to guides
Super quizzes
Superannuation Q&As
Superannuation glossary
Super funds
Best performing super funds
Super fund rankings
Best performing pension funds
Pension fund rankings
Super fund average returns
Super investing strategies
Comparing super funds
Choosing a super fund
Choosing an investment option
Super fund fees
Insurance and super
Super fund profiles
SMSFs
SMSFs for beginners
SMSF administration
SMSF checklists
SMSF compliance
SMSF investing
SMSF pensions
SMSF strategies
SMSF Q&As
Plan your retirement
Retirement planning for beginners
When should I retire?
How long will I live?
How much super do I need?
Will I get the Age Pension?
How much will I spend in retirement?
Financial advice
Retiring overseas
Preparing for retirement
Retirement planning strategies
Retirement calculators and reckoners
In retirement
Income in retirement
Super lump sums
Super pensions
Age Pension
Working in retirement
Life in retirement
Senior concessions and services
Aged care
Estate planning
Super death benefits
Advertisement
Compare super funds

Kickstart your retirement planning

Try our free 7-day email series on planning your retirement, including how much super you’ll need, when you can retire and a quiz to test what you’ve learned.

Learn more

Footer

Important: Disclaimer

All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs.

You should consider whether any information on SuperGuide is appropriate to you before acting on it.

If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.

Learn more

About SuperGuide

SuperGuide is Australia’s leading superannuation and retirement planning website. Learn more

Superguide Pty Ltd ATF Superguide Unit Trust as a Corporate Authorised Representative (CAR) is a Corporate Authorised Representative of Independent Financial Advisers Australia, AFSL 464629

  • Contact us
  • Advertise on SuperGuide
  • Careers

Before using this website

  • New to SuperGuide?
  • Terms and Conditions of Use
  • Financial Services Guide
  • Privacy Policy and Privacy Collection
  • Copyright Policy
  • Editorial Policy and Complaints
  • Disclaimer

  • SuperGuide Premium
  • Subscriber feedback
  • Sitemap