If you’re within five years of retirement, you’re entering the final stretch. The decisions you make now could shape your financial position for the next 20 to 30 years.

With smart planning, you could grow your super significantly — even double it (we’ll show you how). You can also reduce tax and financial risk, setting yourself up for a more secure, fulfilling retirement. In this guide, we’ll explore nine key reasons why these final working years matter more than you might think. Plus, we’ll show you how to make the most of them.

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Why the 5 years before retirement are crucial

Here are nine key reasons why this chapter of your life deserves your attention.

1. Peak income, peak savings

For many Australians, the five years before retirement represent a financial sweet spot. It’s likely you’re earning the highest income of your career, having steadily climbed the ranks.

At the same time, your expenses may have eased: the mortgage is close to being paid off; the kids have moved out. With fewer obligations, it makes it a whole lot easier to save.

But rather than letting the extra income inflate your lifestyle, consider directing surplus funds towards your future. Topping up your super, investing, or paying down outstanding debts can all significantly improve your retirement position.

So, if you’re starting to wonder ‘What should I do financially before I retire?’, the answer starts here: make the most of your “peak income, peak savings” years. The financial decisions you make now will be the difference between a great retirement, and an okay or not-so-great one.

A successful retirement starts with a solid plan. Read our article Retirement Planning for Beginners in 6 Simple Steps to start building yours.

2. Compounding can grow your super rapidly (and potentially double it)

As you near retirement, your superannuation balance is likely at the highest it’s ever been. And here’s why that matters: the bigger the balance, the more compounding works in your favour.

The power of compounding: a visual example

Chart 1 illustrates how a $500,000 super balance could grow, even without making extra contributions.

Chart 1: How a super balance of $500,000 could grow in five years at a 7% annual return, without any additional contributions.

Now, imagine you contribute regularly — say, just over $4,000 per month. For some people in their 50s and 60s, this is an achievable amount, especially when there’s more flexibility to save.

Chart 2 shows how, under the same return assumptions, you could double your super to over $1 million in five years.

Chart 2: How a super balance of $500,000 can grow in five years at a 7% annual return, from compounding and regular contributions.

While this is just one example, it helps show how consistent contributions can significantly grow your balance over time.

And that’s just a starting point. In practice, we help our clients with strategic adjustments (such as minimising tax, reviewing your asset allocation, or optimising contributions) to deliver even stronger outcomes.

Important: these projections are for illustrative purposes only. They are not guaranteed and do not constitute personal financial advice. Outcomes will depend on your individual circumstances, contribution level, investment strategy, fees, and market performance.

3. It’s your final window to maximise super contributions

Your five years before retirement are your last, best chance to take advantage of super contribution caps — and the generous tax perks that come with them.

Concessional contributions

Concessional (before-tax) contributions include salary sacrifice, super guarantee, and deductible personal contributions.

For 2025/26, concessional contributions are capped at $30,000.

The advantage is that these contributions are taxed at just 15% when they enter your super fund or 30% for high income earners, which is usually much lower than your marginal tax rate.

Also, Investment earnings inside your super are taxed at a maximum of 15% while you’re still working.

That means you can reduce your taxable income and grow your super more efficiently at the same time.

Tip: If your total super balance is under $500,000 on 30 June 2025, you could make use of carried-forward unused cap amounts. This is especially helpful if you’ve only recently started contributing more. But remember, any unused cap space expires after five years.

Non-concessional contributions

Non-concessional contributions are made from money you’ve already paid tax on (like personal savings). For 2025/26, the non-concessional contributions cap is $120,000. These contributions aren’t taxed when they enter your super.

And while you don’t benefit from a personal tax deduction for these contributions, investment earnings are still taxed at a maximum of 15%. Once your super moves into the retirement phase, tax on earnings reduces to 0%.

Hence, non-concessional contributions are a powerful way to move money into the low-tax super environment. They’re especially useful if you’ve reached your concessional cap and want to further grow your super.

Tip: If you’re under age 75, and your total super balance is below $2 million on 30 June 2025, you may be able to use the bring-forward rule. This lets you contribute up to $360,000 in one go, by bringing forward two additional years of the non-concessional cap.

Think of these caps as “use it or lose it” opportunities. If you don’t act, you could miss a valuable chance to boost your super and reduce tax — especially if you’re earning more than ever and have fewer financial commitments.

If you’d like a refresher on super contributions, our article Super Contributions Before EOFY: What You Need To Know explains these in more detail.

4. It’s time to structure your super strategically

The five years before retirement are also the ideal time to get strategic with your super. One option is starting a Transition to Retirement (TTR) pension. A TTR pension allows you to draw a tax-effective income from your super while you’re still working.

That means you could:

• ease into retirement, by working fewer hours and using your TTR pension to top up your income
• continue working full-time, while salary sacrificing to boost your savings, save tax, and use the pension payments to increase your take-home pay
• delay retirement, by working one or two days a week, preserving your super balance for longer since you’re still earning and contributing, while supplementing your income with your TTR pension.

Additionally, now’s the time to consider spouse contributions, or contribution splitting. By strategically balancing your super with your partner, you can optimise tax outcomes.

With some clever planning, you can stretch your retirement savings further. Here are 10 Retirement Planning Strategies to help get you started.

5. You can still unlock powerful retirement incentives

Are you across all the incentives available to you? Or could you be leaving money on the table?

If you’re planning to sell your home, the downsizer contribution can be a smart way to boost your retirement income. If you’re 55 or over, you may be able to contribute up to $300,000 per person, from the sale into your super. And it won’t count towards your usual contribution caps.

It’s also worth thinking ahead about Age Pension eligibility. Super, when combined with the Age Pension, can create a powerful income stream. But your eligibility depends on an asset and income test. Taking time now to plan for this can help maximise your long-term benefits.

If you’re a business owner planning to retire, you may be eligible for Small Business CGT Concessions, such as the small business retirement exemption, or 15-year exemption. These exemptions offer an opportunity to reduce or eliminate capital gains tax (CGT) when selling business assets.

The exemption might also be able to be contributed into super tax-free and without counting towards standard cap amounts.

Other opportunities may also apply, such as the spouse contributions tax offset and government co-contributions.

6. Your investment choices now can make a difference

In the lead-up to retirement, your investment decisions matter more than ever. It may be wise to gradually rebalance your portfolio and reduce your exposure to market volatility. But that doesn’t mean going completely conservative. Rather, it’s about finding the right mix for your current stage of life.

One key reason to review your investments is sequencing risk. That is, the risk that a market downturn right before (or right after) you retire could significantly reduce your savings. A 10% drop now hurts more than it would have 10 years out from retirement.

On the flipside, strong returns in these final five years can have maximum impact. With a thoughtful rebalancing strategy, you can protect what you’ve built — and give your super a final boost.

7. You’ll need to decide when (and how) you’ll access your super

When and how you access your super can shape your income, future lifestyle, and tax outcomes.

First, understanding the three notable ages is essential:

1. Age 60 – If you retire, or an employment arrangement ends after this age, you can generally access your super tax-free and without restrictions. Even if you’re still working, you should be able to start a TTR pension. A TTR pension gives you access to your super, but at a limit of up to 10% of your balance each year.

2. Age 65 – You can access your super, without restriction, whether you’re still working or not.

3. Age 67 – You become eligible for the Age Pension (depending on income and assets).

Second, affordability plays a major role. Even if you feel emotionally ready to retire, you also need to be financially ready.

Start thinking now about when and how you’ll start drawing a pension, whether you’ll keep making extra contributions to super, and when you plan to finally retire. The right decision can impact how long your savings last, and how confident you feel stepping into retirement.

8. You finally know what retirement will cost

In your 30s or 40s, retirement likely felt like a distant blur. You were juggling a mortgage, raising kids, and switching jobs — it’s hard to plan for a future that feels so far away.

But by now, in your 50s or 60s, the picture sharpens. The mortgage is nearly paid off. The kids have left home. You know what kind of retirement lifestyle you want, and what it might cost.

Have you actually run the numbers on what retirement will cost you—month by month, year by year? Or are you still guessing?

Start by thinking about everyday expenses and lifestyle goals. These might include:

• travel
• healthcare
• groceries
• utilities
• hobbies
• entertainment.

Once you know what your ideal retirement will cost, you can work backwards — will your super, investments, and any Age Pension entitlements cover it all?

Your retirement expenses are one of the most important variables. In these final working years, you’ve got the clarity (and time) to get it right.

9. Reducing debt now can maximise your freedom later

The final lead-up to retirement is your best shot at a debt-free (or nearly debt-free) future. Every dollar you no longer owe is a dollar you can use to enjoy life after work!

Start by tackling high-interest debts. These include credit cards and personal loans. Clearing them will offer you more breathing room. Next, focus on your mortgage. Even reducing what’s owed can ease pressure and offer peace of mind.

Ultimately, retiring with little or no debt puts you in a stronger position. You’ll be better prepared for market downturns, unexpected costs, or changes to income in retirement. But more than that — it means less stress, more control, and greater freedom to live on your own terms.

Make these last 5 years count

The five years before you retire could make all the difference to the quality of your retirement. Even small actions now can lead to big outcomes later.

So, if you’ve been asking yourself, “What should I do before I retire?” or “What are the steps to take before retiring?” — you’re in the right place. Just by asking the question, you’ve taken the first step. Now it’s about fine-tuning your super strategy and making the most of these final working years.

Ready to take the next step? At Toro Wealth, we’ll help you make these last five years count so you can move confidently into retirement. To speak with one of our retirement advice specialists, book your initial consultation today.

Sources:

• https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds/contributions-caps
• https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/caps-limits-and-tax-on-super-contributions/non-concessional-contributions-cap#Bringforwardarrangement
• https://www.ato.gov.au/forms-and-instructions/superannuation-contributions-splitting
• https://www.ato.gov.au/forms-and-instructions/capital-gains-tax-concessions-for-small-business-guide-2014/small-business-retirement-exemption