The Retirement Mistake That Is Easiest to Make Years Before You Retire

By Mark Taylor – Chartered Accountant, Certified Financial Planner and Founding Partner of Stirling Warton Taylor

Retirement is one of those things most of us know is coming but are quite happy to leave sitting somewhere in the distance.

Then the years move faster than expected. The mortgage is still there, the cost of living has gone up and suddenly the questions become much more immediate: When can I actually afford to retire? How much will I need? And will what I have accumulated last as long as I do?

There is good reason to be asking those questions earlier. Australians are living longer, which means retirement savings may need to support us for considerably longer than previous generations expected.

The latest Australian Bureau of Statistics figures put life expectancy at birth at 81.1 years for men and 85.1 years for women. Thirty years ago, the corresponding figures were around 75 and 81.

For someone hoping to retire in their 60s, that makes planning for 20 years or more without a regular salary a very real consideration.

And plenty of Australians aren’t quite sure when that retirement will begin. The latest ABS retirement data shows 806,000 people intend to retire within the next five years, including 294,000 within two years. Yet 40 per cent of people who intend to retire don’t know when they will actually leave the workforce.

The average intended retirement age is now 65.6.

So, how much is enough?

It is probably the retirement question I hear most often, and unfortunately there isn’t a magic number.

The Association of Superannuation Funds of Australia’s Retirement Standard currently estimates that a comfortable lifestyle for a homeowner aged 65 to 84 costs about $55,900 a year for a single person and $78,600 for a couple.

ASFA’s corresponding savings benchmark for homeowners retiring at 67 is around $630,000 for a single person and $730,000 for a couple. Those calculations assume retirees draw down their capital over time and receive some Age Pension support.

Those figures are useful as a reference point. They aren’t, however, a target that can simply be applied to everybody.

A person entering retirement with their home paid off is in a very different position from somebody still paying a mortgage or renting. Then there are all the other variables: travel, health, helping children or grandchildren, hobbies and, quite simply, what you expect retirement to look like.

There is no one-size-fits-all retirement strategy. The appropriate mix of superannuation, investments, income and growth assets will depend on the individual — their circumstances, goals, time horizon and tolerance for risk.

That is why I prefer to start with the life somebody wants to fund, rather than immediately reaching for a particular dollar figure.

Starting earlier gives you more room to move

This is where time becomes particularly valuable.

Thinking about retirement well before you get there can give you more opportunity to build superannuation progressively, reduce debt and consider how your investments and other assets fit together. There may also be legitimate tax concessions and strategies worth considering along the way.

None of this means putting today’s life on hold for a retirement that may still be decades away. Nor does it necessarily mean choosing between paying down the mortgage and saving for retirement. For many people, several financial priorities will be running at the same time.

There is another reason not to leave all the planning until the final few years: retirement doesn’t always arrive on schedule.

Among Australians surveyed by the ABS in 2024–25 who had retired, reaching retirement age or becoming eligible for superannuation was the most common reason for leaving their last job, at 33 per cent. But 13 per cent had stopped because of sickness, injury or disability, while another 6 per cent had been retrenched, dismissed or found there was no work available.

In other words, the date you expect to retire and the date you actually stop working aren’t necessarily the same thing.

Starting earlier gives you more time to adjust if circumstances — or your plans — change.

Inflation is easy to underestimate

One of the quieter risks is inflation because its effect tends to creep up on us.

Something that costs $100 today is unlikely to cost $100 in another 10 or 20 years. So while protecting savings matters, simply preserving the dollar value of capital does not necessarily preserve what that money will actually buy.

The changing ASFA benchmarks give some indication of that pressure. In 2026, ASFA lifted its comfortable-retirement lump-sum estimates for the first time in three years, taking the benchmark from $595,000 to $630,000 for a single homeowner and from $690,000 to $730,000 for a couple.

The other side of the equation matters too. Pursuing higher growth can mean accepting greater volatility, and that can become particularly important when someone has retired and is drawing an income from their investments.

This is why I don’t think retirement investing is usefully reduced to a simple choice between “income” and “growth”. The right balance depends on what the money needs to provide, when it will be needed and how much investment risk the individual is comfortable carrying.

The important thing is to do something

For a lot of people, superannuation, investments, tax and retirement income can feel complicated. Put enough choices in front of somebody and it becomes very easy to put the whole subject aside for another day.

You don’t need to solve retirement in one sitting. But doing nothing because you don’t know where to begin is still a decision — and the longer retirement planning is postponed, the less time there is to make adjustments.

Start with some fairly ordinary questions. When would I ideally like to stop working? What sort of lifestyle do I want then? What debts might I still have? What assets am I building now? And do I actually understand what my superannuation is likely to provide?

For a lot of people, an SMSF may also be worth considering as part of that conversation. SMSFs can provide greater control over investment choices and retirement strategies, but they also bring additional costs, responsibilities and compliance obligations and will not be appropriate for everyone. Professional advice can help determine whether an SMSF is suitable for an individual’s circumstances.

The answers will change over time. That’s fine. Starting early isn’t about predicting your future perfectly; it’s about having enough time to change course when you need to.

The first step doesn’t have to be a major financial decision. It can simply be finding out where you stand.

Published 15-September-2026

Disclaimer: This column is for general information only and does not take into account your individual objectives, financial situation or needs. You should consider your own circumstances and seek professional advice before making financial decisions.