It’s not uncommon for someone to come to me in their 40s or 50s wanting to get serious about retirement, but worried they’ve left it too late.
Until then, there’s usually been plenty else competing for their money. Saving a deposit. Paying the mortgage. Raising children. Perhaps a renovation, a move or a divorce that has changed their financial position considerably.
If that sounds familiar, no, it isn’t necessarily too late to start retirement planning. There may still be opportunities to improve your position, particularly while you’re earning an income. Whether you can retire when you’d hoped, with the lifestyle you want, needs a closer look at your circumstances.
That’s where I like to start. With what you have, what you want and what we can do from here.
This comes from our Financial Autonomy podcast episode Have You Left it Too Late to Retire Comfortably. You can listen below:
What if retirement feels unaffordable?
I helped a single mum who was 54 and worried about exactly this. She had a good job and a reasonable amount of super, but still owed a substantial amount on her mortgage. She wondered how she would ever afford anything like a comfortable retirement.
We worked through the income her super could potentially provide and what sort of retirement was within reach. The modelling showed that retirement at her preferred age was doable.
Then we explored what would happen if she worked a little longer. She decided she would rather work an extra couple of years and have more to spend in retirement.
She had a choice she hadn’t realised was available to her.
That won’t be everyone’s result. Sometimes the numbers show that more substantial adjustments are needed. But before you decide retirement is out of reach, it’s worth finding out what your finances could actually support.
How do you work out where you stand?
At Guidance, we start with your goals and your current financial position. Your income, super, investments, mortgage and spending all matter. So does what you want your retirement years to look like.
Would you like to travel regularly? Stay in your current home? Help your children? Or would you happily spend less if it meant finishing work sooner?
We bring those details together using financial modelling, projecting how your finances might look through to age 100 or beyond. We can then explore different decisions before you make them.
What happens if you retire two years later? What if one partner keeps working? Could you afford a larger travel budget early on?
These projections rely on assumptions, and we review them as circumstances change. Their value is in helping you understand the potential consequences of your choices, rather than leaving you to guess.
Do you need to know when you want to retire?
Having helped people plan their retirement for more than two decades, I’ve found that plenty don’t have a particular retirement date in mind. They enjoy their work, or simply want to see how they feel closer to the time.
That’s perfectly reasonable. You don’t need to hand in your resignation to have a retirement plan.
Instead, I find it more useful to ask: at what age would you like to have the choice?
Knowing you could afford to stop working puts you in a different position. You might continue because you enjoy it. You might reduce your hours. Or you might decide it’s time for that trip you’ve been talking about for years.
You can plan towards having that choice without committing yourself to a farewell party.
What can make a difference if you’re starting later?
There are several options I explore with clients who are concerned they’re behind. Which ones make sense depends on their circumstances and priorities.
Working a little longer
In my experience, this is often the most impactful option, where health and employment allow it.
There can be several benefits working together: additional super contributions, more time for investments to potentially grow and fewer years when you’re relying on savings to cover your living costs.
If your mortgage is paid off during those years, you may also have more capacity to save.
It’s worth testing the difference rather than assuming you’ll need to work indefinitely. As my 54-year-old client discovered, the decision might be about whether a few extra years are worth the lifestyle they could support.
Looking at how spending could change
When we develop retirement plans, we allow for different layers of spending.
There are ongoing costs, such as groceries and bills, which need to allow for inflation. Then there are expenses that may apply for a shorter period, such as travel or supporting children who are still at home.
For example, an initial goal might be to retire on $100,000 a year. If that looks unaffordable, we could explore whether that amount is needed for the first five years, followed by $70,000 a year afterwards. Those are illustrative figures, but they show why the detail matters.
We also need to allow for larger purchases and possible costs later in life. The aim is a realistic spending plan, rather than simply assuming everything gets cheaper as you get older.
Considering your home carefully
Downsizing can be an option for freeing up money, but I wouldn’t automatically count on it.
We’ve worked with plenty of people whose next home cost more than the one they sold. They wanted something newer, closer to the city or within walking distance of shops and restaurants.
A smaller home doesn’t necessarily come with a smaller price tag. We need to consider what you would actually buy, along with the costs of moving, before treating downsizing as part of the solution.
Reviewing how you’re using your money now
We also look at whether surplus income could be put towards super, your mortgage or other investments, and whether your existing investments suit your circumstances.
There isn’t one answer that works for everyone. Feeling behind isn’t a reason to take investment risks you can’t afford. Equally, it’s worth understanding whether your current approach gives your savings a reasonable chance of supporting your long-term needs.
The Age Pension may also form part of your retirement income if you meet the eligibility requirements. Your own savings may not need to cover every dollar of spending throughout retirement. ASIC’s Moneysmart retirement planning resources explain how these income sources can work together. moneysmart.gov.au
What should you do first?
Start by getting clear on what it costs you to live today and what you’d like retirement to look like.
In my experience, people often underestimate their spending when they build a budget from memory. Looking back over what actually came in, what you spent and what you saved can give you a more useful starting point.
Then consider what might change:
Will you still have a mortgage?
Will you still be supporting children?
What would you like to spend on travel or hobbies?
Are there larger purchases you’ll need to allow for, such as a car or renovations?
When would you like to have the choice to stop working?
You don’t need perfect answers before seeking advice. These are the things we help people work through.
Start with our Retirement Readiness Guide
If you’re wondering where you stand, our Retirement Readiness Guide walks you through seven questions I work through with clients, from when you’d like the choice to retire to what your retirement might cost. It’s a useful starting point, even if you don’t have all the answers yet.
Worried about what retirement will look like for you?
Perhaps you’re still paying off the mortgage, feel your super should be further ahead, or simply don’t know when you can afford to stop working.
At Guidance, we can help you work through your goals, look at your finances and explore different retirement scenarios, so you can understand what’s possible and what might need to change.
Paul Benson is a Certified Financial Planner at Guidance Financial Services in Melbourne, helping Australians plan for retirement and build wealth. He hosts the Financial Autonomy podcast.
Common questions about starting retirement planning later
Is 50 too late to start planning for retirement?
No, 50 is not automatically too late. Your position depends on your finances, spending needs and when you hope to finish work. Planning can help you understand what is achievable and what changes may improve your options.
Can I plan for retirement if I still have a mortgage?
Yes. An outstanding mortgage is something to account for in your plan. We look at the debt alongside your income, savings and retirement goals to explore how it could be managed and what that means for your timing.
Can retirement planning help after a divorce?
Yes. Splitting assets between two households can change what is affordable. A revised plan can help you assess your new financial position and work towards your own spending priorities and retirement goals.
This article is for educational purposes only and does not take into account your individual circumstances. If you would like tailored advice, we can help you work through the numbers properly.
