The decade before retirement can make or break your long-term financial future. It's the period when your portfolio is often at its largest, your super balance has the most to lose from a market correction, and every investment decision carries more weight.
That's exactly why I believe Australian investors should focus on a strategy that blends growth, resilience, and rising income.
For retirees who own their home, the latest ASFA Retirement Standard suggests a couple needs around $77,000 a year for a comfortable lifestyle, while singles need roughly $55,000.
That makes the final 10 years before retirement the ideal time to shape a portfolio designed to support that level of spending.
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Local and global reach through ETFs
My preferred approach starts with broad ASX and global share ETFs as the portfolio's growth engine. A core holding in the Vanguard Australian Shares ETF (ASX: VAS) gives investors exposure to many of the market's best dividend-paying companies.
Adding an international ETF such as BetaShares Global Shares ETF (ASX: BGBL) helps diversify beyond the banks and miners that dominate the local market.
Together, these ETFs can still deliver the capital growth needed to keep pace with inflation over what could be a 25-year retirement.
Increase income, limit risk
But this is also the decade when income starts to matter more. That's why I like gradually introducing a high-yield ETF such as SPDR MSCI Australia Select High Dividend Yield Fund (ASX: SYI). The higher dividend stream, supported by franking credits, can help lift the portfolio's cash generation without relying entirely on selling units.
At the same time, reducing risk becomes critical. A major market sell-off just before retirement can permanently damage a drawdown plan, which is why I would steadily increase exposure to bond ETFs such as the Vanguard Australian Fixed Interest ETF (ASX: VAF).
Bonds may not deliver eye-catching returns, but they can provide stability and act as a valuable shock absorber when share markets turn volatile.
Blue chips for growth
I'd also reserve a smaller slice of the portfolio for a handful of elite ASX blue-chip shares. Names such as Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES), and CSL Ltd (ASX: CSL) can add a blend of dependable dividends and long-term earnings growth. These businesses have the scale and quality to remain core holdings well into retirement.
The real secret, though, is the glide path. Ten years out, I'd still lean heavily into shares. Five years from retirement, I'd be lifting bond and cash exposure. By retirement day, I'd want at least two years of living expenses sitting in cash or term deposits, ready to fund spending needs without touching shares in a downturn.
That combination of ASX ETFs, quality blue chips, bonds, and a cash buffer creates exactly what pre-retirees need most: a portfolio built not just to grow wealth, but to defend it when it matters most.
