Are you planning to work part-time, or walk away from paid work completely? Do you want to travel – and if so, where and how often? Will you be caregiving, and how intensely? Will you volunteer, study or train for something new?
Then go one layer deeper: what does a genuinely great week look like for you? Not an idealised Instagram version of retirement, your real expectations of life. The rhythm of your days matters more than you think once the structure of a hierarchical career stops.
Stepping away from a job, a title or a role can leave a space that feels uncomfortable until you consciously refill it.
These aren’t fluffy lifestyle questions. They’re the foundation of your goal setting, and this comes before the budgeting process.
You simply can’t work out what your future will cost until you know what you want your future to be. And even the smartest financial adviser can’t set those goals for you. Only you can do that part.
Exploring how much is enough
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Once you’ve mapped out the life you want, then you can start working out what it might cost. And this is where people often discover something surprising: their number is usually far more achievable than they feared.
The amount you need in retirement isn’t a single magic figure. It depends on four things: the lifestyle you’ve just described; the income you actually need each year; how much comes from super, the age pension and other sources; and your health, longevity expectations and family responsibilities.
Most Australians will draw their retirement income from a combination of super, part-time work, investments, savings and, for many, the age pension. That means the big lump-sum question matters far less than people think.
In fact, Australians who receive the full age pension over a long life may find it covers up to $900,000 of retirement costs, an amount larger than many people’s super balances at retirement.
So the real question isn’t “What lump sum do I need?” It’s whether you understand how the systems of retirement work, how the layers of income you could have interact, and how to put them to work for you. Then, how they’ll change over time.
Run the numbers – then get some help
If you’ve never run your own “retirement income” calculation before, this is the moment to start.
Your super fund can give you a projection either through their app or their guidance team. You can plug some numbers into a simple calculator. And then take a breath and think about what kind of advice you might need.
Most super funds now offer low- or no-extra-cost advice on retirement, and not enough people realise this is something they’re already paying for through their fees. In other words, it may cost you nothing to give it a try.
If your needs are simple, this level of guidance might be enough. If they’re more complex, you may need comprehensive advice – and if your fund does a poor job, consider that a useful lesson too. It’s still a perfectly good place to begin, especially if you’re not planning to overhaul your entire investment strategy.
You can double dip with your super and the age pension.Credit: Simon Letch
Set up your retirement account and your drawdown
Once you’ve worked out roughly how much income you’ll need, the next piece of the puzzle is understanding how to turn your super into a regular income stream.
This is what happens when you instruct your super fund to shift your account from the accumulation phase (where contributions and growth are the focus and you pay 15 per cent tax on income) into the retirement, or “pension,” phase, where the goal becomes getting a steady, tax-free income while managing risk a little more carefully.
This is the moment where planning becomes reality. Drawing money from your super isn’t just a technical step; it’s a long-term strategy that influences every part of your retirement.
You need to think about how much to withdraw, how often, and how you’ll invest the remaining balance so it continues to grow and support you for decades and all the things you can (or can’t) do with your money.
Spend too quickly, and you risk running down your balance earlier than expected. Spend too slowly, and you risk looking at a pile of money with regrets in your old age.
A good retirement investment and drawdown strategy strikes a balance between having confidence and being cautious. It assumes you want your money to last, yes, but also that you want enough freedom to actually live the life you’ve imagined.
And if you understand the plan, you’re less likely to panic when markets wobble because you’ll know you’ve planned for this.
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Dig in on your sense of purpose
Ultimately, the reason you set up your finances is to give yourself the freedom to spend your time on things you enjoy, care about and feel energised by. These are things you choose, regardless of what they pay. And for many people, that shift can be surprisingly difficult to make.
Our identities are often tied to our work and our ego. Stepping away from a job, a title or a role can leave a space that feels uncomfortable until you consciously refill it. So take the time to reconsider what you value, how you want to contribute and what makes you feel useful and connected is an essential part of the transition.
Your purpose doesn’t need to be grand. It just needs to be yours.
This time of year, is a time when many Australians quietly step out of the workforce. Some have planned it for years. Others arrive here because of restructures, health shifts or caring responsibilities. And this year, I expect we’ll see one of the largest waves of retirements we’ve ever had as a nation this month.
So if you’re thinking about retiring between now and the new year, start with the basics. I’ve released a free starter kit this month – a simple toolkit to help you map out some goals, consider how much is enough, and contemplate your sense of purpose.
It’s a great place to start. And remember, retirement isn’t a finish line any more. For most Australians, it’s a long, gradual shift into a different way of living and earning. The more prepared you are going in, the easier it is to make good decisions and avoid the traps that catch people who leave it too late.
Bec Wilson is author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that considers their own personal circumstances before making financial decisions.
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