If you’re just 5 years away from retirement, you’re in the retirement red zone. What you do now could make or break the lifestyle you’ll enjoy after work. The key is balancing growth with preservation — and avoiding mistakes that could derail decades of savings.
Here’s how to approach investing wisely during this crucial window.
1. Shift from Growth to Preservation — But Don’t Go Too Conservative
While it’s smart to reduce exposure to high-risk assets, going all-in on cash or term deposits might not keep pace with inflation. Instead, aim for a diversified mix of defensive and growth assets (like Australian equities, fixed income, and infrastructure) that balances security with steady returns.
2. Know Your Retirement Income Needs
Estimate how much you’ll need annually in retirement. Then work backwards to calculate the required investment returns and drawdown strategy. This helps guide the risk level of your current portfolio. Use the ASFA Retirement Standard as a baseline for living costs in Australia.
3. Make Extra Super Contributions
With 5 years left, you still have time to boost your super using concessional (before-tax) or non-concessional (after-tax) contributions. Consider catch-up contributions if you haven’t used your cap in recent years. Every bit helps compound your balance by retirement.
4. Review Your Asset Allocation in Super
Don’t just set and forget your super. If you’re in a high-growth option, now may be the time to rebalance toward a moderate or balanced investment mix — still earning but with reduced volatility. Many funds let you easily change your allocation online.
5. Avoid Timing the Market
Trying to buy low and sell high in the final years before retirement often leads to emotional decisions. Stick to your investment strategy, and consider dollar-cost averaging if you’re investing lump sums.
6. Minimise Investment Fees and Taxes
As you approach retirement, every dollar matters. Review the fees on your super and managed funds, and take advantage of tax-effective strategies like franking credits and capital gains discounts where relevant.
7. Stress-Test Your Portfolio
Ask yourself: “What happens if the market drops 15% a year before I retire?” A good adviser can run scenario modelling to check how your investments would perform under different market conditions.
Our Take: 5 Years Can Still Make a Huge Difference
At Wealthlab, we help Australians turn these final working years into a powerful launchpad. Whether it’s repositioning your super, adjusting your asset mix, or creating a reliable income stream — we ensure your investments are ready for the retirement you want.
Let’s build a strategy that protects and grows.
Book your personalised retirement investment session today.
