Start your retirement financial plan early
Don’t wait until you’re getting close to retirement to start your plan. You have a greater chance of a comfortable retirement if you make your plan a priority early in your working life.
A critical part of your retirement plan is superannuation, especially if home ownership is going to be out of reach for you. Being familiar with your super fund and actively managing it is key to your financial future.
Even if you’re further into your working life, there are ways to maximise your super and savings to help you enjoy retired life.
A well-structured retirement financial plan involves:
- assessing your current financial situation
- understanding your future income needs in retirement
- learning how to budget, save and maximise your superannuation
- making informed decisions to help you achieve your retirement goals.
Your retirement plan may change as you get older or as your circumstances change so regularly review your financial plan to stay on track.
How much money do you need in retirement?
This depends on individual circumstances, needs and goals including:
- what age you want to retire
- your retirement lifestyle (e.g. travel, hobbies, living standard etc.)
- fixed and variable living expenses
- whether you’ll own a home or rent
- if others will be financially dependent on you
- healthcare costs
- potential long-term care needs.
How much money do you have now?
Evaluate your current financial standing to understand how much money you currently have and where the gaps in your plan may be.
You should include your:
- superannuation balance
- savings and investments
- all income sources
- current debt levels.
Estimate your potential retirement income
Explore these guides to help you work out how much income you may need in retirement and how much superannuation you may have when you’re ready to retire.
Retirement benchmark
The Association of Superannuation Funds of Australia's (ASFA) estimates how much money you'll need in retirement based on your desired retirement lifestyle (assuming you own your own home).
Retirement planner
ASIC’s MoneySmart website provides easy to understand information about super and retirement. Use their planner to help you estimate the income you’re likely to get from your super and age pension when you retire.
Superannuation calculator
MoneySmart also has a useful calculator to estimate how much super you may have when you retire. It helps you understand how things like career breaks, additional contributions and fees affect your super balance.
Work out your retirement goals
Clear goals will guide your budgeting efforts and help you determine the necessary savings and investments to set you up for the future.
As your financial situation and needs change over time, regularly review and adjust your budget to keep your retirement goals on track.
Remember to develop a budget that accounts for both fixed and variable expenses.
Review your current budget
The first step is to create or review a current budget to figure out where your money is going and what you have left to save or add to your superannuation.
Here are some of smart tools to help you review or create your budget more easily.
Create a budget to help reach your goals
Budgets is an expense tracking tool in the NAB app and NAB Internet Banking that helps you manage your money and budget better.
Track your expenses online with Spending
Our new tool to help you track your expenses through NAB Internet Banking.
Use a budget planner to help you save
Use our free budget planner to create a monthly budget.
Create your retirement budget
The next step is to work out your retirement budget. Here are a few things to consider for your retirement financial plan.
Income sources
Identify all potential sources of retirement income, including:
- superannuation
- personal savings and investments
- government pensions (e.g., Age Pension, opens in new window)
- part-time work (if applicable).
Estimate expenses
Estimate all expected retirement expenses, including:
- housing costs
- utilities
- insurance premiums
- healthcare expenses
- leisure activities.
Adjust for inflation
Account for inflation to ensure your savings maintain their value over time.
A general rule of thumb is to assume an average inflation rate of 2 to 3% per year.
Review goals
Compare your future goals with your current financial situation to discover and fill any gaps in your plan. This might include making extra contributions to super, looking at other ways to invest or becoming a better saver.
Maximise your savings
Learning to become a better saver can set you up for a more comfortable retirement. Here are some guides to help.
Other things to consider before retiring
- Pay off or minimise high-interest debts like home loans.
- Build an emergency fund to cover unexpected expenses or large purchases like a new car.
- Ensure you have adequate health insurance, opens in new window or funds to self-insure.
- Consider long-term care costs and how you’ll pay for them in retirement.
- Seek professional advice from a financial advisor or use the free Financial Information Services, opens in new window from Services Australia.
Explore more articles
What is superannuation?
A no nonsense guide to super for young people. Learn the basics to help build up a healthy super balance.
5 ways to boost your super
Learn strategies that could help boost your super.
How to budget
Create a budget to help you meet your money goals.
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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.
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