Retirement, superannuation, pensions and tax can appear a bit daunting when you are young and many people put off planning for the future because it can all seem a bit too confusing.

If you are thinking you might have around 10 years left of your working life, then there are some steps you can take now to get your retirement savings on track.

There are three main questions to ask before you begin:

  • How much money will you need in retirement?
  • How much are you prepared to contribute now?
  • How long are you prepared to keep working?

Once you have given some consideration to the major questions, you can start thinking about the details.

How long will retirement last?

Many people expect they will be living into their 80s and if you retire at 65 and live to 85, that’s 20 years you have to support yourself without earning an income from employment.

At the moment, you might qualify for the government age pension if you are 65½ or older depending on your circumstances including whether you're a member of a couple, what assets you own, how much income you still earn and whether you are living in Australia.

But this age requirement has been increasing since 1 July 2017 and by 1 July 2023, the starting age will be 67 years.

The amount that the age pension provides might not be enough to support the lifestyle you would like, so superannuation savings and investments might be the way to manage to do more.

The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard has researched some benchmark annual budgets that might give you some idea of what you could need for a ‘comfortable’ or ‘modest’ retirement lifestyle.

What will retirement look like?

When you are not working, you might have plans to travel, take up hobbies, or spend more time with family and friends.

There’s a number of things to consider as you head towards retirement, including:

  • Where you want to live
  • How much travelling you want to do
  • What your day-to-day activities might be

What about expenses?

You might like to think about what your expenses would be when you stop working, and consider the following possibilities:

  • Will you have any debts or mortgage to pay off?
  • Will you need to pay rent where you decide to live?
  • What health considerations do you have?
  • Are there likely to be ongoing costs for any medical conditions?
  • Do you want to leave an inheritance?

The sooner you can start planning for what you want and how you would like to live then the sooner you can put some saving and investing strategies in place.

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Things you should know

This article contains general advice only. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial planner before making any financial decision based on this information. This document has been prepared by Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, (Commonwealth Financial Planning) a wholly-owned, but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning. 

Information in this article is based on current regulatory requirements and laws. While care has been taken in the preparation of this document, no liability is accepted by Commonwealth Financial Planning, Commonwealth Financial Planning related entities, agents and employees for any loss arising from reliance on this document. Taxation considerations are general and based on present taxation laws. You should seek independent, professional tax advice before making any decision based on this information. Commonwealth Bank is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Before you make a decision about your combining your super if you multiple accounts, you should compare the costs, fees, risks and benefits of each super fund. It makes sense to consider whether you can replace any insurance cover you may lose when you bring your accounts together, as well as any costs for withdrawing from other super funds and any investment or tax implications.