Retirement planning isn’t something you do once and then ignore. It’s more like checking the weather before a long road trip: you need to know where you’re going, what might get in the way, and whether you’re prepared for the journey. Many Australians wait too long to start this conversation, which means they either stress about money in retirement or miss opportunities to make it easier.
What Does Retirement Actually Look Like?
Before you can plan for retirement, you need to picture it. And this is where most people get stuck.
Retirement isn’t a single moment. It’s a phase of life that can run for 30 years or longer. Some people retire at 55, some at 70. Some retire completely, others gradually wind down work. Some travel the world, others stay close to home. Some retire into hobbies and community, others struggle with identity and purpose.
The financial side matters, but it’s only part of the picture. You need to know not just whether you’ll have enough money, but what "enough" means for your life. Do you want to travel? See grandkids? Stay in your home? Support causes you care about?
Start there. Retirement planning without a clear picture of what you want is like building a house without knowing whether you need three bedrooms or one. The structure won’t match your needs.
The Three Phases of Retirement Readiness
Think of retirement readiness as a framework with three phases. The exact timing is different for everyone; what matters is knowing which phase you’re in.
Phase 1: Accumulation. You’re working, earning and building assets. The focus is on getting superannuation working properly, managing debt strategically and diversifying your wealth. For most people this is the longest phase.
Phase 2: Transition. This is the run-up to retirement, often the last few years of work. You’re getting clearer on your retirement picture, running the numbers, checking whether your assets can support your lifestyle, and making any final moves: paying down debt, repositioning investments, adjusting super contributions.
Phase 3: Drawdown. You’re living off what you’ve built. The focus shifts from growing assets to managing them well: structuring income, managing tax, and making the money last as long as you do.
Most people skip straight from Phase 1 to Phase 3, which is why so many feel unprepared at 60. The transition phase is where the detailed planning happens, and it’s the phase most often missed.
Where Retirement Income Comes From
Retirement income generally comes from three sources.
• Your assets. Superannuation, investment portfolios, property, savings. You live off the income they produce and, when needed, draw down capital.
• Government support. The Age Pension is means-tested, and the qualifying age is 67. Depending on your income and assets, the Age Pension may form one part of a broader retirement income plan.
• Ongoing income. Some people keep a day or two of work in early retirement. Others have rental income or pensions from previous employers.
Most retirees rely on a mix of these. The question is how much comes from each, and whether the total meets your needs. The reality: the Age Pension alone is modest. For the retirement most people picture, with travel, hobbies and helping the grandkids, superannuation and personal investments do the heavy lifting.
How Much Do You Actually Need?
This is the question everyone asks, and there’s no single answer. But there are useful starting points.
ASIC’s Moneysmart suggests around 70% of your working-life income as a rough starting point for maintaining your lifestyle in retirement. If you earn $100,000 now, that’s roughly $70,000 a year. Some people need less (mortgage paid off, kids independent). Some need more (extensive travel, health costs, supporting family).
A better approach: work backwards from your lifestyle. What do you actually want your retirement weeks to look like, and what does that cost? Travel, hobbies, helping grandkids, aged care. Add it up. That’s your target number.
Then run the numbers: can your superannuation, investments and any Age Pension entitlement fund that figure? If not, what needs to change while there’s still time to change it?
This is where working with someone who knows your situation matters. The numbers are important, but so is flexibility. Life changes, markets move, plans shift. A good retirement plan has room to adjust.
Superannuation: The Retirement Engine
Superannuation is the most powerful retirement-building tool most Australians have, and most people barely manage it.
Eligible employees generally receive a 12% employer super guarantee contribution, and you can add more on top. Concessional contributions and investment earnings inside super are generally taxed at 15%, which for many people is lower than their marginal tax rate. And from age 60, benefits from most super funds are usually tax-free once you’ve met the access conditions.
That’s a significant advantage. It’s the government giving you a tax-effective vehicle for retirement savings.
Yet most people treat super as set and forget. And people who never review their super can miss real issues: fees eating into returns, investment settings that no longer suit their age and goals, insurance they’re paying for but have never checked, and contribution opportunities left unused. What to look at:
• Check your balance and your fees. Many people genuinely don’t know either number.
• Consider extra contributions. Salary sacrifice can be tax-effective, and even modest extra amounts compound over the years.
• Review your investment option. Is the mix right for your age, timeframe and comfort with risk?
• Consider consolidating multiple accounts. Scattered accounts usually mean duplicated fees, but check insurance cover before closing anything.
• Plan your access. From age 60, meeting the access conditions changes what your super can do for you. Structure your retirement income with that in mind.
The Debt Question in Retirement
Here’s something many people don’t think about: should you enter retirement with a mortgage?
The old advice says pay off your home before retirement. The newer thinking says look at the opportunity cost of every extra dollar. Both have a point, and the honest maths is more subtle than a simple rate comparison: investment returns are variable and usually taxable, while the interest you save on your mortgage is guaranteed and tax-free. Numbers alone rarely settle it. Your buffer, your tax position and your sleep-at-night factor all belong in the decision.
There’s no universally right answer. What matters is being intentional. If you want to retire mortgage-free, start that plan now: increase payments, adjust the budget, make it happen. If you’re comfortable carrying a mortgage into retirement and can service it, that’s a valid choice too.
The key: don’t drift into either position. Decide thoughtfully, based on your situation.
The Tax Efficiency Piece
Retirement taxation is complex, and small decisions can affect your finances over 20 or more years.
Once you retire, your income sources change: super, investments, possibly the Age Pension. Each income source has different tax treatment, and the Age Pension is also means-tested. The goal is structuring your retirement income well. That can include:
• How and when you draw income from super
• How your taxable investments fit alongside super
• The timing of major investment or capital decisions
• Whether spouse super strategies could improve the overall position
Getting these pieces working together can make a meaningful difference over a long retirement. This is where having a coordinated retirement strategy really matters, and where good advice tends to pay for itself.
How LOC Approaches Retirement Planning
We don’t just run numbers and hand over a plan. We start with what your retirement actually looks like: what matters most, and what worries you.
Then we look at the layers: your super position, your investments, your property, your income, your tax situation, any debts. We factor in government benefits and anything else that helps.
We stress-test the plan against market changes, inflation, health costs and longevity, so it holds up in more than one scenario.
Then we build a roadmap: what to do now, what to do in the transition years, what to do at retirement. Because retirement planning isn’t a one-time event.
And we keep checking. We review regularly: is it tracking, has anything changed, does anything need adjusting?
