Most people treat retirement planning like something they’ll figure out later. Then suddenly they’re 55, looking at their super balance, and realizing later just arrived. Getting solid financial advice for retirement planning means understanding that the average Australian needs roughly 70% of their pre-retirement income to maintain their lifestyle, according to the Association of Superannuation Funds of Australia. For a comfortable retirement, that translates to about $50,000 annually for singles and $70,000 for couples. The median superannuation balance for Australians aged 60-64 sits around $178,000 for men and $137,000 for women, which honestly won’t stretch 20-30 years without strategic planning. Studies from the Retirement Income Review show that people who engage professional financial advice accumulate 50% more retirement savings on average than those who don’t.
Time Works For You or Against You
Here’s the math that everyone learns too late. Starting retirement contributions at 25 versus 35 doesn’t just give you ten extra years of savings. It gives you ten extra years of compound growth. A $5,000 annual contribution at 25, growing at 7% annually, becomes roughly $1.1 million by 65. Start at 35 with the same contribution and growth rate? You end up with about $540,000. That’s literally half the money.
The first decade matters disproportionately because those early contributions have 30-40 years to compound. Even small amounts create outsized effects. Contributing an extra $50 per month starting at 30 generates approximately $85,000 more by retirement than the same contribution starting at 40.
Diversification Beyond Superannuation
Relying solely on super means putting all your eggs in one basket that you can’t access until preservation age. Most financial advisors recommend building at least three retirement income streams: superannuation, investment properties or shares outside super, and government entitlements if eligible.
Property investments carry their own risks and require significant capital, but they offer tax advantages through negative gearing and CGT discounts. The key is not over-leveraging. I’ve seen people stretch themselves thin buying investment properties in their 50s, only to face mortgage stress if tenants leave or rates rise.
Shares held outside superannuation provide liquidity and flexibility. You can access these funds before preservation age if needed, and franking credits reduce tax liability. The trick is maintaining appropriate asset allocation as you age. Being 80% in growth assets at 25 makes sense. At 60? That’s probably too aggressive.
Salary Sacrifice Strategies
Salary sacrificing into super reduces taxable income while boosting retirement savings. Contributions are taxed at 15% inside super versus your marginal rate, which could be 32.5% or higher. For someone earning $100,000, sacrificing $10,000 saves roughly $1,750 in tax annually while adding that amount to super.
The concessional contribution cap sits at $30,000 annually. Maximizing this, especially in high-income years, accelerates super growth significantly. Some people don’t realize you can carry forward unused cap amounts from previous years, allowing larger contributions if you haven’t maxed out historically.
Age Pension Considerations
The age pension provides a safety net, but means testing limits how much you can receive if your assets exceed certain thresholds. Understanding these thresholds helps with strategic planning. Some retirees benefit from spending down assets to increase pension eligibility, while others focus on maximizing super to minimize reliance on government payments.
