Retirement planning: 7 financial things to do 10 years before retirement

Your last 10 years of work are the most powerful years you’ll ever have with money.

You’re probably in your early 50s. Your income is at its peak. Your kids are getting older. And there’s still enough time for compounding to do serious work.

Here’s the maths. At 7% a year, money doubles in about 10 years. That’s the rule of 72: divide 72 by the return. So every dollar you invest at 50 could be two dollars at 60.

I’ve built more than 300 retirement plans over 18 years. The people who retire on $15K to $25K a month almost always use these 10 years well. Here are the 7 things I get every client to do. This is general information only.

1. Pick a number and a date

“Sometime in my 60s” isn’t a plan. Pick the income you want and the age you want it.

Then work backwards. As a rough guide, at a 5% income return you need about 20 times the yearly income you want. $200K a year means about $4M. $300K a year means about $6M.

I model this across several scenarios: different retirement ages, returns and spending. You see exactly when you can stop, and what it pays. How much money will you need to retire comfortably?

2. Know exactly where you stand

List everything. Super for both of you. Shares, vested and unvested. Cash. Your home, and what you owe on it. What you actually spend each month.

Most tech executives have never seen it on one page. When they do, the gap, or the surplus, is usually a surprise. See what a full road map looks like.

3. Hammer your super

This is the biggest lever in your last 10 years. Max out your $30K concessional cap every year. Then put spare cash and RSU proceeds into super as well, up to $120K a year of after tax money.

Earnings in super are taxed at 15% at most. From 60, a retirement pension from super is generally tax free.

One client was 49 with $800K in super, combined with his partner. They put in $8,500 a month. 11 years later it’s $4M, enough for $200K a year, tax free. Read the case study.

4. Make your home equity work

If you have $1M+ of equity in your home, it may be the laziest asset you own.

Debt recycling and a separate investment loan can put it to work, with the interest generally tax deductible. Using the rule of 72, $1M invested at around 7% could double in about 10 years.

Borrowing to invest adds risk, so it needs a stable income, a buffer and a long time frame. 7 powerful ways to use debt to build wealth.

5. Sell down your company stock

10 years out is when too much in one stock really hurts. A 50% fall at 58 is very different to a 50% fall at 38.

Set a sell down plan around your vest dates, so it’s done on a schedule and not on gut feel. Spread sales across tax years. Use the proceeds for the home loan, super and a diversified portfolio.

6. Clear the home loan and know your spending

Aim to own your home outright by the day you retire. Every dollar of home loan you carry into retirement has to be paid from after tax income.

At the same time, track what your lifestyle really costs. Most people underestimate it. Travel, kids and health costs tend to go up in the first years of retirement, not down.

7. Protect the plan

Review your insurance, your wills and your super nominations. A testamentary trust can help pass assets to your kids with protection.

Think about your home too. From 55, each of you may be able to put up to $300K into super from the sale of your home with a downsizer contribution.

What 10 years can do

Two people with the same income and the same assets at 50 can retire 10 years apart.

The difference is almost never the salary. It’s whether they had a plan for the bonus, the RSUs, the equity and the super, and stuck to it.

Who I do this for

My clients are tech executives and sales leaders, aged 40+, earning $400K+ with RSUs or big commissions. Most have at least $500K in super and $1M of equity in their home, and can save at least $4,000 a month above their minimum mortgage repayments.

If that’s you and you’re within 10 years of retiring, now is the best time to start.