Planning for retirement? Start with these 5 steps

Nick McKenna • June 11, 2025

Woman with dark hair in a yellow sweater sits by a window, holding a phone, looking at the camera.

#1: Set clear retirement goals

The very first step in retirement planning is to define what you want your retirement to look like. When you hear the word retirement, what do you think of?

Consider the following questions:

When do you want to retire? Determine your ideal retirement age, keeping in mind that it may affect your savings strategy. While most of us may dream of retiring early, there are generally two retirement age rules that affect when most Australians can retire. These retirement age rules are the same for both men and women.

Age 60 : this is the earliest age where it’s possible to access your retirement savings under the ‘retirement’ condition of release or start a ‘transition to retirement’ pension.
Age 67: this is the age when you can access Australia’s Age Pension, provided that you meet the eligibility criteria – which includes a residency test, income test and assets test.

What lifestyle do you envision? Think about where you want to live, what activities you want to pursue and whether you plan to travel. Maybe it’s extensive travel, volunteering for a charity, spending more time with your family and friends or even still working part-time.
What are your anticipated expenses? Estimate your future costs, including housing, healthcare, travel and leisure activities. You may also want to financially help your children or grandchildren.

Having a clear vision will help you set specific, measurable goals.

#2: Assess your current financial situation

Next, take stock of your current finances to understand your starting point. This includes:

Income sources: Identify all sources of income, such as salaries, rental income or investment returns.
Assets and liabilities: List your assets (savings, investments, property) and liabilities (mortgage, loans) to gauge your net worth.

This assessment will help you determine how much you need to save and invest to reach your retirement goals.

You should also understand how much you currently have in super. Super is a long term investment vehicle that carries you through two phases of life. There is an accumulation phase followed by a retirement phase but it’s important to note that these aren’t mutually exclusive.

You can have some of your super in an accumulation account and some in a retirement account as you navigate your way between the two. Understanding the difference is important though, as each phase has different tax treatment, rules and potential strategies.

#3: Estimate your retirement income needs

So, how much is enough? While we all hope for a simple answer, how much money you need in retirement differs for everyone.

How much are you spending today? Do you think you’ll spend more, less or the same in retirement? And by how much: 5%, 10%?

Consider:

Government benefits: understand your eligibility for the Age Pension. For information about payments for veterans, see income support on the Department of Veteran’s Affairs (DVA) website. For other types of payments, including carers allowance, use Centrelink’s payment finder.
Pension plans: if you have a pension, understand its benefits and when they will be available.
Withdrawals from retirement accounts: plan how much you’ll need to withdraw from your savings to cover any gaps.

Consider trying a retirement calculator to determine how much you’re likely to have if you continue saving at your current rate and compare that to how much Association of Superannuation Funds of Australia (ASFA) indicates you might need.

#4: Create a savings and investment strategy

With your retirement income needs estimated, develop a strategy to accumulate the necessary funds. This involves:

Setting a savings target: Based on your income needs and how much you’ve saved so far, determine how much you need to save annually.
Choose appropriate investment options: Decide how to invest your savings, balancing risk and return. Diversification is key to managing risk in retirement. As you approach retirement you may prefer to dial down the risk of your investments (both inside and outside of super) and opt for a more conservative strategy. Speak to a financial planner – they can help you with this. It is also important that you understand and review how your super is invested.

#5: Monitor and adjust your plan

Retirement planning is not a one-time task; it requires ongoing monitoring and adjustments. Regularly review your financial situation, savings progress and market performance. Consider:

Life changes: Major events, such as marriage, divorce, or the birth of a child or grandchild, can impact your retirement plans.
Review your investments approach : Regularly review your investments to ensure they still meet your financial goals, risk level and personal circumstances. A financial planner can also assist you with this.
Manage withdrawal rates: Be aware of how much you’re withdrawing from your pension (if you have one) each year to avoid going through your savings too quickly.

Establish a routine for annual reviews or consult a financial planner to keep your plan aligned with your goals.

#Extra tip: start planning today

Whether you’re 25 or 55, it’s never too early or too late to start preparing. The earlier you start planning for retirement, the more prepared you'll be for the future you envision. And by acting early, you can take advantage of compound interest, allowing your savings to grow significantly over time.

Plus, starting early gives you the flexibility to navigate unexpected expenses and life changes without financial stress.

Don’t wait for the perfect moment – begin mapping out your retirement goals today. Your future self will thank you!

Source: MLC

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Understanding longevity risk in retirement

By Nick McKenna • October 28, 2025

Australians are living longer than ever before due to a combination of factors including improved healthcare, better living conditions and over all better quality of life. With this longevity comes the challenge of ensuring financial security throughout a longer retirement. Data from the Australian Bureau of Statistics (ABS) shows that life expectancy at birth is now 81.1 years for males and 85.1 years for females1. Despite the increases in these averages, many Australians will live well beyond these ages, making planning for your retirement income more important than ever. What is longevity risk? Longevity risk refers to the possibility of outliving your savings. Living longer allows you to enjoy the fruits of life for longer but it also means planning carefully to ensure your savings last as long as you do. For Australian retirees, this is especially important, as the Age Pension alone may not be enough to cover all living expenses over an extended period. According to the Challenger Retirement Happiness Index2, 72% of Australians aged 60+ report that the rising cost of living has adversely impacted their financial security, with 34% admitting the impact was significant. This highlights the importance of planning for longevity risk to maintain financial confidence in retirement. Building financial security for the future To ensure a comfortable and secure retirement, it’s important to take proactive steps to manage longevity risk. Here are some key considerations: 1. Understand how long your retirement savings may last Knowing how long you might live can help you plan your finances to last throughout retirement. Factors like health, lifestyle and family history can play a role in estimating life expectancy. 2. Understand your income sources Retirement income can come from a mix of sources, including the Age Pension, superannuation, personal savings and investments. For many Australians, the Age Pension alone may not be enough to cover all living expenses, especially if superannuation or other savings run out. Adding a source of regular income such as a lifetime annuity to your retirement income plan can help you manage the risk of outliving your savings. By using some of your super or other money to set up a lifetime income stream, you could create an additional layer of secure income that complements the Age Pension, if you are eligible. This approach helps to provide peace of mind by ensuring you have a regular source of income that can cover essential needs throughout your life. This can form part of a comprehensive retirement income plan. 3. Use planning tools and resources Make a budget The Age Pension is a key safety net for many Australians. Consider how it works, including eligibility and its role alongside superannuation and lifetime income streams. For personalised guidance to help you make informed decisions about your finances, consider accessing free services like the Financial Information Service (FIS) offered by Services Australia or see a Financial Adviser. The benefits of financial security Financial security can transform retirement into a time of freedom and fulfilment, allowing retirees to focus on what truly matters. With a lifetime income stream you can enjoy meaningful activities like traveling, pursuing hobbies or spending quality time with loved ones without the stress of financial uncertainty. The Challenger Retirement Happiness Index2 reveals that 41% of Australians aged 60+ see "having enough money to enjoy retirement" as essential for happiness, while 33% value knowing their money will last. This financial confidence provides the foundation for a retirement filled with confidence, happiness and peace of mind. Planning for a confident retirement A well thought out retirement plan provides the confidence to enjoy life without the constant worry of running out of money. By understanding longevity risk and taking proactive steps, you can feel more confident that your retirement income will last as long as you do. Source: Challenger