Retirement should be a time to enjoy the fruits of your life’s work - not a time to stress over finances. Whether you’re five years away or just beginning to think about retirement, planning ahead puts you in control. With the right tools and strategies, you can create a retirement plan that aligns with your lifestyle goals. The earlier you start, the better prepared you’ll be.
Many people think of retirement as a time to relax and enjoy life, but without some planning, finances can become a source of stress. Having a plan in place can help you avoid common pitfalls and have the resources you need for your later years.
Why Retirement Planning Matters?
Planning for retirement isn’t just about how much money you’ll have - it’s about how you want to live. Do you plan to travel? Downsize? Support family? Knowing your lifestyle goals helps shape your financial decisions.
Without a clear plan, you may find yourself working longer than expected or making compromises in retirement. That’s why early and realistic planning is key.
Understand Your Retirement Needs
Start by asking:
- When do I want to retire? Do I want an early retirement or a phased approach?
- What kind of lifestyle do I want in retirement? How much will that cost and how will I fund it?
- How long do I need my money to last? Some people retire in their 50s, while others work into their 70s or beyond.
Most Australians and Americans spend around 20–30 years in retirement. That’s a long time to fund without regular income. A common rule of thumb suggests you’ll need 70–80% of your pre-retirement income each year in retirement - but that depends on your lifestyle.
Estimate Your Future Costs
To build a realistic retirement plan, understanding where your money will go is a useful starting point. Start by breaking down your likely expenses into key categories.
- Daily living costs (housing, food, transport)
- Health and aged care
- Travel and leisure
- Unexpected costs
Don’t forget to factor in inflation and rising healthcare costs over time. Retirement Financial Planning & Projections Spreadsheet from FinancialAha is a useful tool to help you forecast expenses, visualize income sources, and test different retirement age scenarios.
Identify Your Income Sources
Where will your retirement income come from?
- Superannuation or 401(k)
- Government pension or social security
- Personal savings and investments
- Rental income or annuities
- Part-time work or business income
The more diversified your income, the more flexible and secure your retirement will be. The FinancialAha spreadsheet can help you input each source and see how long your savings will last.
Close the Gap
If your projected income doesn’t match your desired lifestyle, it’s time to:
- Boost your savings: Increase your super contributions or retirement account deposits.
- Reduce spending: Reevaluate your retirement lifestyle expectations or reduce expenses.
- Invest wisely: Ensure your investment mix aligns with your retirement timeline and risk tolerance.
- Consider working longer: Even an extra year or two of work can significantly increase your retirement funds.
Use the projection tools in the FinancialAha spreadsheet to test these adjustments in real time.
Stay on Track
Retirement planning isn’t a “set and forget” task. Regular check-ins - at least annually - are important. As life changes, so should your plan.
Things to review:
- Investment performance
- Changes in expenses or goals
- New income opportunities or tax changes
Consider working with a financial advisor for additional confidence, especially as retirement nears.
Retirement is your time - plan it your way. If you prefer a more DIY approach then using a Retirement Financial Planning & Projections Spreadsheet from FinancialAha can be more cost-effective when compared to the costs of a financial advisor. With a clear plan and the right tools, you can enjoy a retirement that’s not only secure - but truly fulfilling.