5 Tips to start your retirement planning

Planning for retirement in Australia is more important than ever. With longer life expectancy and the rising cost of living, more Australians are prioritising financial independence in retirement. Superannuation is one of the most powerful tools to help you get there. Starting early allows you to take advantage of compounding growth and create a future that aligns with your goals.

Here are five practical tips to guide your retirement planning strategy in Australia.

 Tip 1: Set Clear Financial Goals for Retirement

A well-defined retirement savings goal sets the stage for everything else in your retirement strategy.

How Much Will You Need?

The necessary savings for a comfortable retirement* at age 67 are:

Single $595,000 Couple $690,000

These figures are in today's dollars, using 2.75% average weekly earnings (AWE) as a deflator, and assuming an investment earning rate of 6%. They don't take into consideration your personal needs or circumstances. *The above refers to information published in the Association of Superannuation Funds of Australia (ASFA) Retirement Standard.

When setting goals, consider:

• Healthcare costs in retirement
• Travel plans
• Daily living expenses
• Leisure activities

Use online calculators such as the moneysmart calculator to assess how much super you are expected to retire with, based on your current balance, income, and contributions.

This will give you a clear sense of whether you're on track for a comfortable retirement, allowing you to make informed adjustments to your plan if needed.

 Tip 2: Understand Your Superannuation Contributions

Knowing how contributions work, and how to make the most of them - is essential for building long-term financial security.

Types of contributions:

• Employer Contributions: In Australia, employers must contribute 11.5% (2024/25 Financial Year) of your salary into your super fund (please note this will increase to 12% from 01 July 2025). Make sure you’re receiving the correct amount.
• Salary Sacrifice (pre-tax contributions): Voluntarily redirect a portion of your pre-tax income into super to reduce your taxable income and accelerate your superannuation growth.
• After tax contributions: Top up your super account from your after-tax income to maximise savings and your contribution caps.
• Government Co-Contributions: If you a low or middle income earner, the government may match part of your after-tax contribution and contribute up to $500 each financial year.  

Optimising your superannuation contributions is a foundational step in any retirement planning strategy.

Tip 3: Diversify your portfolio and choose an investment option that aligns with your goals.

A strong retirement strategy includes a diverse range of investments to reduce risk and boost returns over time.

Explore Your Options:

Low to medium risk

If you're approaching retirement or prefer a more cautious investment approach, low to medium risk options (such as the Conservative or Conservative Balancedmay suit your needs. These options aim to provide steady, reliable returns with minimal volatility - making them ideal for preserving your super balance while still outpacing inflation.

Medium to high risk

If you have a longer investment timeframe or are comfortable with market ups and downs, medium to high risk options (such as ,, Balanced, Balanced Socially Responsible, Growth and High Growth) offer greater growth potential. These are best suited to those further from retirement or with a higher tolerance for volatility.

With legalsuper, you can also invest in a mix of these options - or, for a more hands-on approach, choose the Direct Investment Option, where you can select from listed shares, ETFs, and term deposits to tailor your super to your individual investment strategy.

The key is to diversify your retirement portfolio across different asset classes to mitigate risks. Choosing the right investment mix for your stage of life strengthens your superannuation planning and helps you stay on track toward a comfortable retirement.

Tip 4: Explore Downsizing and Alternative Housing Options

Your home can be one of your most valuable retirement assets, and downsizing can free up equity to support your lifestyle by boosting your super balance.

Things to Consider:

• Selling to Fund Retirement: The sale of a larger home can provide extra funds for both everyday living and retirement savings.
• Downsizer Contribution to Super: If you're aged 55 or older, you may be eligible to contribute up to $300,000 from the sale of your home into your super without impacting your concessional caps.
• Choosing Where to Retire: Some parts of Australia offer more affordable living and better services for retirees, researching the best locations can make a big difference.

Your housing decisions should support both your lifestyle and your financial goals, making them an important part of your broader retirement planning strategy.

Tip 5: Plan for Healthcare Costs

As you age, healthcare costs in retirement can become a more significant part of your budget.

Be Prepared to budget for costs such as:

• Private Health Insurance

• Out-of-pocket medical expenses such as specialist consultations, prescription medications, dental treatments, and gap payments not fully covered by Medicare or private health insurance, can add up quickly in retirement.

Ensuring you have a plan to cover rising health expenses is key to maintaining peace of mind and protecting your assets.

 Start retirement planning with confidence by considering these five tips. Whether it's understanding your super contributions, setting super goals, or diversifying your portfolio, every small step brings you closer to financial independence in retirement.

Taking action today can lead to a secure and fulfilling retirement tomorrow. Visit our Planning for Retirement page or explore our guide on Future Planning for your Super to take the next step in your journey.

Ready to take control of your retirement? Start planning today with legalsuper and build the financial future you deserve. You can also book a free one-on-one session with a legalsuper Client Service Manager, who can help you understand your super, explore contribution options, and tailor a strategy that suits your goals.