If you’re planning to retire in 2027, now is the time to get your finances organised.
It’s not just about having enough in super. You need to understand how much you’ll spend, where your income will come from and how your assets will fund the next stage of life.
There are a few decisions worth working through before you hand in your notice. Here are five to get you started.
1. Work out how much you’ll spend
Start with your expected annual spending, rather than your current salary or super balance.
Review your bank statements and group expenses into regular bills, lifestyle spending and one-off costs. Think about the holidays you want to take, whether you’ll replace a car, and whether you plan to pay off your mortgage or help family members financially.
Your retirement spending won’t necessarily match what you spend today. Some work-related costs may disappear, while travel, hobbies and having more time to do the things you enjoy could take up more of your budget.
The important thing is to be realistic. It’s easy to underestimate what you’ll spend if you only look at your regular bills and forget about the bigger expenses that crop up throughout the year.
Create a separate retirement budget and make adjustments based on the life you actually want to live.
2. Decide how you’ll replace your salary
When work stops, your pay cheque stops too. You’ll need a plan for how your assets will support your regular spending.
That could involve superannuation, cash savings, shares and ETFs, rental income or proceeds from selling an investment property.
Look at the whole picture rather than making decisions about each asset separately. We see it all the time: someone can have a substantial amount of wealth on paper, but that doesn’t automatically mean they have enough accessible cash or regular income to fund their lifestyle.
For example, an investment property might be valuable but still require you to contribute money each month after rent and expenses. The value of the property is one thing. The income it puts in your pocket is another.
Your goal is to understand where the money will come from, how much you’ll have available and whether those sources can support your expected spending over time.
3. Match your money to your goals
Not every retirement expense needs to be funded in the same way.
You might want to clear your mortgage, replace a car, renovate your home or set aside money for a major holiday. Work out how much each goal will cost and where the money could come from.
It’s worth thinking through these decisions before making a big financial move. Selling an investment, withdrawing money from super or accessing funds held in a company can have different tax implications depending on your circumstances.
If you own a company with retained profits, for example, taking money out may have personal tax consequences that need to be assessed.
You don’t need to have every decision locked in today. But understanding your options and the potential costs before you act can help you avoid an expensive surprise.
4. Set aside money for the shorter term
You don’t want to be forced to sell long-term investments at an inconvenient time just to pay your bills.
Consider setting aside enough money for expected living expenses, upcoming purchases and emergencies. The amount will depend on your circumstances, your spending and the other income available to you.
You can think about this as a series of buckets: money for immediate spending, reserves for medium-term needs, and investments intended to support you over the longer term.
These don’t have to be separate accounts or products. The idea is to know which money is intended for which purpose, while keeping your overall portfolio aligned with your needs and comfort with risk.
The right balance will look different for everyone. Too little accessible cash can leave you feeling uncomfortable when markets fall, but holding too much in cash can also affect the long-term growth of your money.
Think about what you’ll need in the coming years, what other income you’ll receive and how comfortable you are with the ups and downs of your investments.
5. Plan for both partners
If you’re retiring as a couple, don’t assume you’ll both have the same options at the same time.
You may have different super balances, different retirement dates or different access arrangements. Your eligibility for government support may also change as you get older.
In Australia, access to super and Age Pension eligibility are subject to specific rules and conditions. Check the rules that apply to each person rather than assuming your circumstances are identical.
It’s also worth looking at how your finances work together. One partner might finish work before the other, or one person might have more super while the other has savings or investments outside super.
Build a plan that considers both partners now and how things may change over time. It should also account for what happens if one of you lives longer than expected or your circumstances change.
Get the full picture before you finish work
One of the simplest steps is to put your financial information on one page. List your assets, debts, super accounts, savings and investments. Check whether you’ve overlooked an old super account and make sure you understand how your super is invested.
You don’t need to solve everything in one sitting. But knowing where you stand makes it easier to identify the gaps, compare your options and make decisions with more confidence.
Retirement planning isn’t only about accumulating enough money. It’s about working out how that money can support the next 20 or 30 years of your life.
Want help getting retirement ready?
The Rask Retirement Academy, with me, Tahli Cavagnino, among its instructors, is designed to help you understand the key decisions involved in preparing for retirement.
The online course covers topics including budgeting, understanding your super, planning retirement income and getting across government support. You’ll also have access to tools and calculators to help you work through the numbers and build a clearer picture of your own retirement.
Explore the Rask Retirement Academy and start planning for the retirement you want.
For more retirement planning insights, listen to the Australian Retirement Podcast episode “Retiring in 2027? 5 decisions to make before you stop work”.
Or if you know you need financial advice, we’d love to help. Reach out to us at Rask Advice.
This article contains general financial information only and does not take into account your objectives, financial situation or needs. Consider your own circumstances and seek personal advice before acting on anything discussed.
