1. Work out what you’ll need 

The Association of Superannuation Funds of Australia (ASFA) estimates that to support a modest lifestyle, an individual who owns their own home will need an annual income of $24,506; and a couple will need $35,189. 

If you’re looking to enjoy some comforts in life, then plan on needing $44,011 and $60,457 a year, for singles and couples respectively. 

I generally subscribe to the ‘Rule of 20’ which means that once you have decided what level of income you’ll need in retirement, multiply it by 20 to determine the level of capital required to support this. i.e. if your income requirement is $50,000 then your retirement goal should be $1,000,000 in today’s dollars terms. 

2. Sort out your super 

Superannuation remains one of the tax-efficient ways to accumulate assets to provide for your retirement. With a maximum of 15% tax applied to investment earnings, while you are working, and the potential for earnings to be tax-free in retirement, superannuation should be a major part of your retirement plan.  

While your employer may already be making compulsory super contributions of 9.5% of your salary, you should consider potentially topping that up through salary sacrificing where contributions to superannuation are made from your pre-tax salary, therefore providing you with a tax saving. 

You can contribute up to $25,000 a year to super, including your employer’s compulsory super contributions, all of which is taxed at the concessional rate of 15%.  

3. Manage your debt 

If you’re still making mortgage repayments or renting after you retire, this can be a major drain on your retirement income. Therefore it’s a great idea to pay off your home loan before retirement. This may mean making extra contributions into your home loan above your minimum monthly repayments. 

4. Boost your super 

Once you have repaid your debts and your children are financially independent this can be a great time to boost your super balance. Up until age 65, you can continue to make extra non-concessional (or post-tax) contributions of up to $100,000 a year. 

If you have additional funds available to invest – for instance, if you’ve sold a property or another asset – you may be able to use the ‘bring forward’ rule to make up to three years of non-concessional contributions in one go, meaning you and your partner could contribute up to $300,000 to superannuation in one year. 

This is generally available if your super balance is under $1.4 million and you’re under 65 at the beginning of the income year. After that, but before you are under 75, you’ll generally need to be working about 40 hours a month before you can make super contributions. 

5. Take greater control 

Once you have more than say $350,000 in superannuation, between you and your spouse, it may be time to consider a Self Managed Super Fund (SMSF) 

An SMSF has the potential to give you greater control over your super and lets you invest directly into assets such as listed shares and property. 

The added flexibility and control provided by an SMSF enables your investment strategy to be specifically tailored to your individual requirements. 

Retirement can be rewarding but planning for it can be complicated and complex. To make sure your family stays protected and you have the best retirement possible, you should always speak to a financial adviser first.