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Retirement Planning: when’s the right time to start?

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When you’re young, planning for your retirement seems like an issue for another day. Then, later down the track, we wonder if we started too late.

So when is the right time start planning for retirement?

The answer is: any time.

No matter what stage of your life you’re in, there are  steps you can take to improve your retirement future. 

1. Your 20s – Getting Started

For you, “retirement is aaages away”. You’re at the beginning of your career and have finally started earning decent money.

So,  why on earth would you be thinking about retiring? Especially when it involves putting away money you can’t even touch for decades?

Well, when it comes to compound interest, small changes have a big pay-off.  Assume you add just $30 per week to your super, and receive a 7% returns on it.

Over the forty years of your working life, that adds not just $48,700 in your own contributions, it will net you an additional $119,800 in interest payments. That's money you didn't have to work for!

This doesn't take into account any fees, but it gives you an idea of how something small can grow over time. You can do your own calculations for making extra savings here.

Sadly, 40% of young Australians don’t know what their super balance is and 60% have more than one super account. [i]

This means that even if you are regularly contributing to your super, you could be losing money in extra account fees and missing out on additional compound interest. Therefore, it’s vital you find out if you are missing any super.


2. Your 30s – Finding Time

In your thirties, super often ends up taking a back seat. Perhaps you just bought your first home or recently had kids, and with all these new financial responsibilities, the thought of putting even more into your super makes you wince.

But just like your 20s, the decisions you make about your retirement today will set you up for the long run. How?

For starters, if you have a mortgage or any debt now is the time to work on paying it off. For a typical 25 year mortgage, the first 5 to 8 years of your repayments go towards paying off the loan’s interest, so anything extra you pay on top of that can reduce your interest payments and loan length in the long term.[iii] Finding out how you can pay down your mortgage earlier will give you one less thing to worry about when planning for retirement.

Another important thing to consider is how you will contribute to your super if you decide to take time off work. Managing to pay super even while you’re on parental or maternity leave will put less pressure on you to increase your balance later – and you’ll get to take greater advantage of that compounding interest.

And finally, review your super fund. Super might seem like something you can just set and forget, but to make sure you’re getting the most out of your savings you should regularly check it.

Look at the fees and investment returns and ask yourself ‘is this the best fund available?' If not, consider other  options or talk to a Yellow Brick Road adviser to get an objective view.

Take the first step

3. Your 40s – Crunch Time

Haven’t thought too much about your retirement? Now’s the time to get fired up and take some serious action. Start thinking about when and how you would like to retire. What sort of lifestyle do you want,,,,,, and how much will it cost?

According to the Association of Superannuation Funds of Australia (ASFA), for a comfortable lifestyle a couple would need around $60,000 a year. [iv] Upfront that might not seem like much but over a 25 year period that would require around $1,500,000 in retirement savings. So, what can you do now to boost those savings?

  • Consider salary sacrificing – paying extra from your pre-tax salary
  • Add to your non-super investments
  • Actively pay off any outstanding debts or loans

You can find out more about how much super you’ll need with our Super Calculator.

4. Your 50s – Managing Risk

The kids are moving on, the mortgage is paid off (or almost is) and retirement is just around the corner. The focus now is on increasing your super contributions and managing your risk – especially what’s known as ‘sequencing risk’.

This is essentially the risk that you’ll lose some of your capital close to the time you need to draw down on it.

As you get closer to retirement your super balance and investments are at their highest and so a negative return means a loss now is greater than it would’ve been on a smaller balance.

This doesn’t mean you should shy away from super – not at all! But rather,  be mindful of managing the risk profile of your investments. Being in the same default option as a 25 year old may not be the best idea.

A common way to manage these risks is to choose a balanced or conservative portfolio reduces volatility and lowers the risk of significant negative returns while still providing some growth.

And if you haven’t done so already, you could consider making additional super payments to take advantage of the 15% concessional tax rate on super contributions up to $25,00

5. Your 60s – Living the Dream

Well done! You can now retire (almost). If you’ve just reached your preservation age but you’re younger than 65, you can consider a transition into retirement by accessing your super early to supplement your income.

While this may be a convenient option, it does decrease the total amount of retirement savings in the long run, so if you retire earlier you’ll have less overall. On the other hand, accessing your TTR pension can enable you to work less but for longer – so you can retire later and extend your retirement savings.

In conclusion

Back to the question: Is it ever too early or late to plan for retirement? Not at all! No matter what age you are, you can always do something.


[ii] Assumptions

The information provided is for general use only and cannot be construed as advice. This calculator will show the impact of compound interest and the amount of savings by making extra deposits

The calculations within this document do not take into account any fees, charges, your personal goals or objectives. The results provided by these calculators are an approximate guide only. These calculators, or the results generated, do not constitute any agreement by us to provide credit assistance. Applications are subject to normal lending guidelines. See for more details.


  • Initial deposit of $1000
  • One year is 52 weeks exactly, a month is 52/12 weeks and a fortnight is 26 weeks.
  • Interest is calculated by compounding annually
  • Deposits are made at the start of each period.
  • Rounding is made at the end of the calculations and not at each payment period
  • It does not take into account up-front fees and monthly/annual account fees.
  • You can email your results to yourself and if you request, a copy of your results and contact information is sent to the web site owner.
  • You can print your results for future reference.
  • You should consult a finance professional before you make any.

Term – 40 years
Interest rate 7.00% p.a.
Deposit frequency:  weekly 
Contributions: $1000 



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