Retirement isn't won on your last day at work. It's won in the five years before it.
That final stretch is where small decisions can snowball into six-figure differences in your retirement savings. Get it right, and you'll likely enter retirement with confidence. Get it wrong, and you could spend decades wishing you'd planned a little better.
Here's why those last five years matter so much.
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Your super is usually at its biggest
For most Australians, their super balance is higher than it's ever been during the final years before retirement. That's important because investment returns work in percentages.
A 10% return on a $100,000 balance earns $10,000. The same 10% return on a $700,000 balance adds $70,000.
In other words, your super is finally big enough for compounding to do some serious heavy lifting. Every extra contribution and every positive year in the market can have an outsized impact on your retirement balance.
You're still adding to the pile
There's another powerful force working in your favour. If you're still employed, your employer continues making compulsory super contributions.
Those contributions, combined with investment earnings, mean your nest egg for retirement is still growing.
The moment you retire, that process flips. Employer contributions stop. Instead of adding money, you begin withdrawing it to fund your lifestyle.
Many Australians underestimate just how significant that transition is.
Mistakes become far more expensive
Early in your career, poor investment decisions can often be recovered over decades.
Five years before retirement? Not so much. Taking excessive risks in search of higher returns could leave you exposed to a major market downturn just before you stop working.
On the other hand, becoming too conservative too early could mean missing years of valuable growth. Finding the right balance between protecting your wealth and continuing to grow it becomes increasingly important.
This is when retirement planning becomes real
It's also time to move beyond simply checking your super balance.
Ask yourself some practical questions. How much income will you actually need for retirement? Will you receive a full or part Age Pension? Should you pay off debt before retiring?
Would a transition-to-retirement strategy help you reduce your working hours while keeping super contributions flowing?
These aren't decisions you want to leave until your farewell morning tea.
Don't overlook the emotional side
Many people spend years planning their finances but almost no time planning what retirement will actually look like.
Leaving full-time work is one of life's biggest transitions. Some people thrive. Others quickly discover they miss the routine, purpose, and social connection that work provided.
That's why many Australians are choosing a gradual retirement instead of stopping overnight. Working part-time for a few years can ease the financial pressure while making the lifestyle adjustment much smoother.
Foolish takeaway
The final five years before retirement aren't simply a countdown. They're an opportunity.
It's your last chance to boost your super through employer contributions, salary sacrifice, or voluntary contributions while giving compounding one final opportunity to work its magic.
Retirement isn't determined by one spectacular investment or one lucky year in the market.
More often than not, it's the decisions you make in those final five years that determine whether you spend retirement worrying about money, or enjoying the freedom you've spent decades building toward.
