There’s no single ‘correct’ approach to your retirement – and, in fact, there are multiple ways Australians can approach the problem of funding their retirement if they don’t want to have to depend on the age pension.

But there is a best practice approach and that is by maximising the assets you will have once you hit retirement and then how you manage those assets after that. Here’s how you can create a solid retirement portfolio in five simple steps.

Sell those risky stocks

Is your portfolio made up of a mish mash of stock ideas? Got a handful of lithium explorers, unprofitable biotechnology shares or companies you don’t fully understand? Do you have very few or a small portion of your portfolio allocated to core solid, high quality stocks? Now’s the time to reorganise your portfolio and sell out of most of those risky speculative stocks. Holding around 40% of your portfolio in high quality, profitable stocks is the foundation to build your wealth.

It’s still ok to dabble in speculative stocks, as long as that is limited to a very small percentage of your portfolio.

Hold dividend stocks

Most investors already know this. Dividend paying stocks like the big four banks Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC), Telstra Corporation Ltd (ASX: TLS) and the retailers Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES), offer regular, generally consistent income – even during bad times.

However, it’s also important to consider investing in companies that are growing their dividends.

A sensible asset allocation

The best retirement portfolios will have their assets diversified across a range of industries and stocks, with exposure to different asset classes, including cash and fixed income – as we illustrated here.

While it’s sensible to have a number of growth stocks in the portfolio, it’s also important to hold some slower growing blue chip stocks – like some of the ones mentioned above, or hold a number of broad-based exchange traded funds (ETFs) with exposure to different countries/regions like the US or Europe.

Invest regularly

It’s important to consider adding funds regularly to your retirement portfolio – whether it’s inside the superannuation system or outside it. Sensible investors will usually have both and add to both as often as they can – which allows compound interest to work its magic over time.

And it’s important to note that your compulsory employer super contributions probably won’t be enough to see you enjoy the type of retirement you’d like on their own.

Get the professionals working for you

If you don’t have the knowledge, skills or confidence to invest directly in the stockmarket in your own, seek out those that can help. That could be your accountant, a financial planner or one of The Motley Fool’s market beating services such as Motley Fool Pro.

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Motley Fool writer/analyst Mike King owns shares in Telstra, Wesfarmers and Woolworths. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.