5 steps towards a ‘financially fit’ retirement

Retirement is one of life’s biggest transitions, and it deserves careful planning. Whether it’s just around the corner or still a few years away, taking time to review your financial strategy can help you feel confident about the future.

From understanding your risk profile, to calculating your expenses in retirement, to making decisions about your debt, determining when to retire, and deciding how to withdraw your funds, the choices you make now can have a lasting impact on your lifestyle for decades to come. After all, the average Australian spends around 20 years in retirement, so it’s worth getting it right. It’s also important to consider when you should begin your estate planning.

Here are five practical steps to help you prepare for a secure and comfortable retirement.

1. Calculate retirement expenses

For some, the cost of living may decrease after finishing work, due to reduced expenses such as commuting and maintaining a work wardrobe. However, if you plan to travel more, purchase a new vehicle, or renovate your home, these additional expenses need to be factored in when calculating how much you’ll need.

According to the Association of Superannuation Funds of Australia (ASFA), the average annual budget to maintain a comfortable lifestyle in retirement is $76,505 for a couple and $54,240 for a single person. To maintain a modest lifestyle, ASFA estimates a couple will need $50,866 per year, while a single person will need $35,199. Both estimates assume you already own your home.

You can find easy-to-use budgeting tools on the MoneySmart website to help you calculate your expenses and estimate your income from super and the Age Pension.

2. Take action on mortgages and loans

Starting retirement with manageable or low levels of debt can help you feel more financially stable.

If you’re still repaying a mortgage after retiring, you might consider downsizing your home or using your superannuation to reduce the debt. However, it’s important to consider the tax implications and ensure any actions comply with superannuation laws.

If you’re exploring either of these options, our expert financial advisers can explain your choices and obligations in detail.

3. Checking your timing

Knowing when and how you can access your superannuation is essential for effective retirement planning.

You can start using your super to fund your retirement once you reach your preservation age, which is generally age 60. You may also choose to begin a Transition to Retirement Income Stream (TRIS) while continuing to work.²

Alternatively, if you continue working beyond your preservation age, you can withdraw your super once you turn 65—regardless of your work status.

There are also limited circumstances where you may be able to access your super early, such as in cases of severe illness or financial hardship. However, strict eligibility criteria apply.³

4. Decide how to withdraw your funds

You may be able to withdraw your super as a lump sum, depending on the rules of your fund. This could be the entire balance or a portion of it, or you may choose to receive regular payments instead.

If you opt for regular payments (made at least once a year), this is known as an income stream. At this point, your super account moves from the accumulation phase, where contributions are made, to the pension phase.

Once you begin drawing an income stream from your super, you must meet minimum withdrawal requirements. For example, if you are under age 65, you are required to withdraw at least 4% of your super balance each year. This drawdown rate increases as you get older.⁴

5. Retirement and estate planning

Estate planning should be considered well before retirement. Having the right structures in place, such as a valid Will, powers of attorney, and beneficiary nominations, helps protect your assets and ensures your wishes are carried out both during retirement and after your passing.

When superannuation is paid to your estate, the tax treatment depends on the type of beneficiary and the components of your super. Payments to dependants, such as a spouse or young children, are usually tax‑free. However, if your super goes to your estate or to non‑dependant beneficiaries, the taxable portion may be subject to tax (around 15% plus the Medicare levy), while the tax‑free portion is always paid tax‑free.

It is also a vital part of your broader financial strategy. A well‑prepared estate plan provides clarity for your loved ones and can reduce stress, delays, and unnecessary costs at an already difficult time.

Seek professional advice

Planning your retirement with confidence starts now. Whether you’re looking to maximise your super, reduce debt, or make sense of your income options, our experienced financial advisers can help you and your loved ones make informed decisions for a more secure financial future.

Sources

i ASFA Retirement Standard, September Quarter 2025 – The ASFA Retirement Standard – ASFA

ii Super withdrawal options | Australian Taxation Office

iii When you can access your super early | Australian Taxation Office

iv Payments from super, April 2025 – Payments from super | Australian Taxation Office