Insights

There is a moment that a lot of people in their late 50s describe in a similar way. They are still working, still earning, still contributing to super. But something has shifted. The question is no longer "how do we build this?" It is "when do we stop, and how do we do it without getting it wrong?"

What is interesting is how little thought most people have given to the gap between those two things. The years between full-time work and full retirement are not just a waiting room. They are, in many ways, the most financially significant period of the whole journey.

Why the transition period is where it gets decided

The decisions made in the three to five years before retirement tend to have an outsized impact on what retirement actually looks like. How much you draw, when you draw it, whether you keep working in some capacity and how you structure that income, whether you use a transition-to-retirement strategy or let things run on autopilot. None of these are small questions, and most of them are time-sensitive.

The problem is that this period rarely gets the attention it deserves. People are still busy. Work is still demanding. The spreadsheet gets opened, looked at briefly, and closed again. The plan gets deferred to a future version of themselves who will presumably have more time and clarity.

That future version rarely shows up on schedule.

What a gradual wind-down actually looks like

For most couples approaching retirement, the transition does not happen in a single moment. It happens in stages. One partner steps back first. Or both reduce their hours. Consulting replaces full-time employment. A business starts to run more independently, or conversations about a sale begin in earnest.

Each of those stages has financial implications that are worth understanding in advance rather than managing after the fact. The order in which you draw from different income sources matters. The timing of when you move super from accumulation phase to pension phase matters. Whether you are still earning income while accessing super, and how that is structured, matters.

Done well, this period can mean paying significantly less tax, keeping super invested for longer so it has more time to grow, and arriving at full retirement with a clearer picture and a larger balance. Done on autopilot, it tends to produce the opposite.

The question worth sitting with

Most people can tell you roughly when they would like to retire. Fewer can tell you exactly what the two or three years before that point are going to look like, and fewer still have a clear sense of how the financial structure around those years has been set up.

That is not a criticism. It is genuinely complicated, and it lands at a point in life when most people are still flat out. But the transition period rewards attention. The couples who tend to arrive at retirement with the most confidence and the most options are almost always the ones who started thinking about it a few years earlier than felt strictly necessary.

Three questions worth asking yourself now

If you are in your mid to late 50s and still working, you are likely in that window right now. These are worth sitting with:

• If you stepped back to part-time work in the next twelve months, do you know how that would affect your tax position and your super contributions?
• Have you looked at whether a transition-to-retirement income stream makes sense given your current income and super balance?
• Do you and your partner have a shared picture of what the next three to five years actually look like, financially and practically?

If those questions are hard to answer, that is useful information. It is also a good reason to have a proper conversation before the window narrows.

If you are approaching this period and want to think it through properly, we are happy to help. Get in touch and we can work through the picture together.