Five years before retirement
Retirement rarely arrives on a single day. It creeps up over about five years — the stretch where the mortgage is finally under control, the kids have moved out, and the question changes from “how much have I got?” to “is it enough, and when can I stop?”
Those last five working years are the most valuable planning years you will ever have. You still have income to work with, you still have time for decisions to compound, and you can still change course without much pain. Here is a practical countdown.
Five years out: get clear on your three ages
Most people mix these up, and the confusion costs them.
- Preservation age — the age you can first touch your super. It is now 60 for everyone.
- Age Pension age — 67 if you were born on or after 1 January 1957.
- Your age — the one you actually want to stop work at, which is often somewhere in between.
Reaching 60 doesn't automatically unlock your super. You also need to meet a condition of release — usually retiring, changing jobs after 60, or simply turning 65. Knowing the gap between when you want to stop and when each source of money switches on tells you exactly how big a bridge you need to build.
Four years out: find every dollar of super you own
Australians hold billions of dollars in lost and unclaimed super, most of it left behind in old jobs. Log in to myGov, link the ATO, and run a Super Health Check. It takes about ten minutes and it shows every account in your name, including anything the ATO is holding for you.
Consolidating into one fund often cuts duplicate fees — but check what you would be giving up first. Some older accounts carry insurance you can't replace once it's cancelled, and a few hold benefits that disappear on exit. Look before you close.
Three years out: use the caps while you're still earning
This is the window where extra contributions do the most work, because you still have salary to direct and the money still has time in the market. The limits from 1 July 2026:
| Contribution type | Cap for 2026–27 |
|---|---|
| Concessional (before tax) — employer, salary sacrifice, personal deductible | $32,500 |
| Non-concessional (after tax) | $130,000 |
| Transfer balance cap — the most you can move into a tax-free retirement pension | $2.1 million |
If your total super balance was under $500,000 at 30 June, you may also be able to use carry-forward concessional contributions — unused cap amounts from the previous five financial years, stacked into one year. It is particularly useful in a year with a bonus, a redundancy payment or a capital gain to offset.
Two years out: test the plan against a real budget
Take twelve months of actual bank statements, not a guess. Strip out what stops at retirement — work travel, the second car, contributions themselves — and add what starts: more travel early on, higher power bills from being home, private health cover you may have been sharing with an employer.
Then ask the harder question: what happens if markets fall 20% in your first two years? Drawing an income out of a falling balance does lasting damage, which is why many retirees hold one to three years of spending in cash or conservative assets. That buffer is not about returns. It is about not being forced to sell at the worst moment.
One year out: the paperwork nobody enjoys
Check the beneficiary nomination on every super account — they expire, and super does not automatically follow your will. Review the insurance inside super before you cancel anything, since cover often ends around 65 anyway. Make sure you have an enduring power of attorney in place, and that the person named knows what you would want.
The final months: get the timing right
You can lodge an Age Pension claim up to 13 weeks before you reach Age Pension age, which avoids a gap in income while Services Australia processes it. If you are close to a threshold, the order in which you draw down accounts and start a pension can change your entitlement, sometimes by a meaningful amount.
None of this requires a perfect forecast. It requires knowing your three ages, knowing what you actually spend, and using the years while you still have income behind you. That is what turns retirement from a leap into a step.
General information only — not personal financial advice. It doesn't consider your objectives, situation or needs. Consider whether it's right for you and seek advice before acting.
Jason Bell and Compass Retirement and Aged Care are Authorised Representatives of Millennium3 Financial Services Pty Ltd (AFSL 244252).
Source: Australian Taxation Office, Key superannuation rates and thresholds (contributions caps and transfer balance cap, 2026–27), August 2026. https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds/contributions-caps · Services Australia, Age Pension — who can get it. https://www.servicesaustralia.gov.au/who-can-get-age-pension
