Three Strategies to Prepare for Retirement

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Retirement is one of life’s great milestones – a time to enjoy the rewards of your hard work and look ahead to what comes next. For some, it’s travelling more often. For others, it’s slowing down, spending time with family or finally starting those projects that have been on the “someday” list. But while the idea of retirement can be exciting, it’s also a stage that brings plenty of questions. Two-thirds of Australians worry about whether they’ll have enough to fund the retirement they want, and nearly half finish work earlier than planned – sometimes because of health, redundancy or caring responsibilities. Living longer only adds to the pressure, with retirement stretching 20–30 years for many. That’s why it pays to prepare. The earlier you start, the more options you’ll have when you’re ready to step away from full-time work.

Supplementing Income

Easing into retirement often means working fewer hours. While this can create the freedom you’ve been looking forward to, it also means less take-home pay — and that can feel daunting. One option is a Transition to Retirement (TTR) pension. This allows you to draw from your super while you’re still working, giving you a way to top up income as your hours reduce. Pairing this with salary sacrifice can be especially powerful for those earning more than $45,000 a year. You put more of your salary into super at a concessional tax rate, then draw from your TTR pension to balance your cash flow. The result is keeping your lifestyle steady while potentially saving tax. For some, consulting or part-time work is also part of the plan. The important thing is creating flexibility so your income can support your lifestyle without depleting your retirement savings too soon.

Portfolio Allocation

How your investments are structured leading into retirement has a big impact on the years that follow. Traditionally, the approach has been to reduce risk and shift more heavily into defensive assets like bonds and cash. But with Australians living longer and inflation a constant consideration, many retirees are maintaining a meaningful exposure to growth assets such as equities. Why? Because a 65-year-old male today is expected to live until 85 and a female until 87. That’s two decades or more of expenses – plenty of time for inflation to eat into purchasing power. While defensive assets provide stability, they don’t always deliver the growth needed to keep pace. A well-considered balance between growth and defensive investments can help protect against longevity risk while still providing income. It’s not about choosing one or the other – it’s about tailoring your portfolio to your goals, risk appetite and timeframe and stress-testing it to see how it might perform under different conditions.

Explore The Options

Superannuation is central to retirement planning, but it’s not the only strategy available. For some, contribution caps or transfer balance limits mean looking beyond super to continue building wealth. Investment bonds, for example, can be an effective way to save outside super, with tax capped at 30% (and often reduced through rebates). Spousal contributions can help equalise super balances between partners and maximise household retirement income. Downsizing contributions also allow Australians over 55 to add up to $300,000 into super from the sale of their family home. Your home itself can also play a role. For some, downsizing provides both a lifestyle change and a cash flow boost. For others, using equity to invest in income-producing assets offers another way to support everyday expenses in retirement. The key is keeping options open and building a plan that’s designed around your circumstances – not just following a one-size-fits-all approach.

The Bottom Line

Retirement isn’t something to drift into – it’s something to prepare for. By supplementing income, aligning your portfolio with a longer life expectancy and considering the full range of options available, you can take control of your retirement journey.

The earlier you begin the conversation, the more confident you can be about what’s ahead.