What to do in the year before you retire

If you intend to retire in 2025, now is the time for some serious planning. These are the questions you need to answer to ensure you’ll be ready.

Retirement can be a huge lifestyle change, so the last thing you need is added stress caused by a lack of preparation. Knowing about some of the key impacts of retirement – or at least a checklist and knowing who you can contact for help – may be helpful.

But the reality is that there’s plenty to think about in the months ahead of retirement. Consider this checklist.

  How will I pay for retirement?

Superannuation is most people’s largest asset after their family home and forms the bulk of their nest egg. If you’re retiring, you should know your balance, the value of other assets, and have an idea of your Age Pension eligibility.

The Australian Institute of Health and Welfare (AIHW) says about 63% of the population aged 65 and over receive income support.¹ Of these, the vast majority (92%) receive the Age Pension.

However, many people retire on a combination of super, a part pension and income generated from personal assets.

  How much money will I need?

The Association of Superannuation Funds of Australia’s Retirement Standard² is updated regularly and indicates how much income singles and couples, who own their home, might need each year for a ‘comfortable’ or ‘modest’ retirement.

For a comfortable retirement, the ASFA Retirement Standard calculates a 65 to 84-year-old single person requires $52,085 a year while couples require $73,337. Single retirees seeking a modest retirement need $33,134 and couples $47,731.

To fund a comfortable lifestyle, a single person retiring at age 67 needs a super balance on retirement of $595,000 and a couple $690,000, ASFA says in its June 2024 quarter publication.

  Are my debts repaid?

It’s becoming more common for Australians to head into retirement with debt, mainly mortgages. Paying this off should be a key consideration for any new retiree, and may require some super or proceeds from selling other assets. Being debt-free will simplify anyone’s retirement finances.

  What other investments do I have?

Many retirees have assets outside of super including investment properties and share portfolios. You should consider these assets in any retirement income strategies.

  What Age Pension benefits can I get?

Services Australia provides detailed information about the Age Pension including eligibility rules, income tests, asset tests and payment rates. Eligible singles can receive up to $1,047.10 a fortnight and couples $1,578.60.³ If you prefer to speak to someone you can contact Services Australia on 132 300.

  Will I downsize my home?

It can get difficult for some people to look after a large family home, and downsizing can potentially free up extra cash. By doing so you may be able to put some of the money from the sale of your property to your super.

The Government's downsizer contribution measure allows you to make a one-off contribution to your super when you sell your family home if you are 55 or older. You can add up to $300,000 as an individual, or $600,000 as a couple (if you are both eligible), from the proceeds of the sale.

Learn more about downsizer contributions

  How will my lifestyle change?

Are extra holidays on the cards? Do you need to upgrade your vehicle or household furniture? Planning any new hobbies? Factors such as these that will likely affect your financial budget, and should be considered.

  Do I have a budget?

After you retire there are no regular wages to top up your income if needed. This makes budgeting more important as each dollar should be watched more closely. There’s plenty of free calculators and budget planners available online, including at moneysmart.gov.au⁴

  Is my estate planning sorted?

A current will is vital, but it’s not the only part of estate planning that should be addressed before retirement, and whenever your circumstances change.

Consider appointing a power of attorney, which gives someone the authority to manage your affairs if you can’t do so yourself. An enduring power of guardianship enables someone to decide where you live and your medical care, while advanced healthcare directives deal with what happens to your body if you can’t make decisions yourself.

We’re here to help

If you're starting to think about retirement, you might like to register for one of our retirement seminars. Our super experts can unpack the strategies you'll need to help you build your best retirement.

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1. Australian Institute of Health and Welfare, Income support for older Australians, 7 September 2023, accessed 23 October 2024.
2. ASFA Retirement Standard, June quarter 2024, accessed 23 October 2024.
3. Services Australia, Age Pension, How much Age Pension you can get - Age Pension - Services Australia, accessed 23 October 2024.
4. Australian Securities and Investment Commission (ASIC), moneysmart.gov.au, accessed 23 October 2024.