7 tips to reduce your debts before you retire

As your working life draws to a close, your social life and recreational activities don’t have to. If you’re a little anxious about money still owing, here are a few pointers.

Ahh retirement! You may have been dreaming about it for decades. You visualise yourself putting away your uniform, high-vis or corporate gear, farewelling that lovely boss of yours and spending the rest of your days swinging in a hammock by the ocean somewhere.

As the dream teeters on reality, you can’t help but contemplate the debt you’re yet to pay off and how it might create roadblocks for the things you may still want to do – the family barbecues, the weekend getaways, possibly even helping the kids out.

While many Aussies will carry some debt into retirement, the good news is, there are a number of things you could do now while you’ve still got time on your side and earning an income.

1. Crunch the numbers and get organised

  • Work out what debts you have and what they total

  • Compare what you earn, owe and spend and consider where you might be able to cut back

  • Look into whether you could benefit from rolling your debts into one loan

  • Pay your debts on time to avoid additional charges

  • Consider paying the full amount outstanding on your credit card(s), rather than the minimum owing

  • Look at whether you could afford to make extra repayments

  • Shop around for providers with lower interest rates and no annual fees

  • If you’re experiencing financial hardship, talk to your providers, as most can assess your situation and help you find alternative payment plans.

2. Get serious about having a budget

If you’re approaching retirement, you may be prioritising things such as living costs, day-to-day bills, health care and helping the kids, if you have them. With many Aussies looking at a retirement (which in reality, could span a few decades), another thing to give some thought to is recreation and your social life.

A good starting point when it comes to setting up a workable budget (so you can manage the things mentioned above) is figuring out what money you have coming in, what expenses you’ve got and what you might be able to put aside. You can use our budget planner calculator if you want a hand.

Perhaps you’re wondering how much money you’ll need to retire on?

According to ASFA’s December 2022 figures, individuals and couples around age 67 who are looking to retire today would need an annual budget of around $46,462 or $69,691 respectively to fund a ‘comfortable’ lifestyle. That’s assuming they own their own home.

To live a ‘modest’ lifestyle, which is considered slightly better than living on the age pension alone, individuals and couples would need an annual budget of around $31,323 or $45,106 respectively.

3. Consider what money you might have access to when you stop work

The money you use to fund your life in retirement will likely come from a range of different sources, including the following:


Generally you can start accessing super when you reach your preservation age, which will be between 55 and 60, depending on when you were born. Knowing your super balance is a crucial part of planning for retirement, as it’s likely to form a substantial part of your savings.

If you’ve got more than one super account, there may also be advantages to rolling your accounts into one, such as paying one set of fees. However, there could be certain features lost in the process, such as insurance, so make sure you’re across everything before you consolidate.

Investments, savings, inheritance

You may be planning to sell or use income you’re generating from shares or an investment property or use money you’ve saved in a savings account or term deposit to contribute to your retirement. An inheritance or proceeds from your family’s estate may also help in your later years.

The government’s Age Pension

Depending on your circumstances, as well as your level of income and assets, you could be eligible for a full or part age pension from age 65 to 67 onwards (depending on when you were born), or you may not be eligible for assistance at all.

4. Know where your money is sitting and what it’s doing

Having spare money sitting in the one place mightn’t be the best thing. For instance, if you’ve got cash in a transaction account, could you be earning more if it was invested elsewhere, or even placed in an offset account linked to your home loan (if you have one) to reduce what you pay in interest?

Looking at different investment options inside your super could also potentially generate better returns. Do keep in mind though that a more conservative approach may be a better option as you get older, as when you’re younger, you generally have more time to ride out market highs and lows.

5. Think about downsizing your home or refinancing

Find out what you need to know about downsizing your home, as this could help you top up your retirement savings.

You might also be interested to know that when you reach age 55, you can make a tax-free contribution to your super of up to $300,000 using the proceeds from the sale of your home (if you’ve owned it for 10 years and it’s your main residence). There will be potential advantages and rules however that you’ll need to be across.

Refinancing, whereby you replace your existing home loan with a new one, could also create cost benefits and more financial flexibility.

Remember, your living arrangements in retirement should be based on more than just your finances. Your health, partner, family and what activities you want to pursue once you stop work will play a part.

6. Contemplate working a bit longer

This could help you to boost your savings as well as your super balance, so that you have a more comfortable lifestyle in retirement. In fact, the main reason most older Aussies say they want to stay in the workforce is financial security3.

It’s also interesting to note, retirement isn’t necessarily a one-time event, particularly when it comes to the 45 to 54 and 55 to 59 age groups, with as many as 26.7% returning to employment annually4.

Meanwhile, regardless of whether you’re still working full-time, part-time or casually, if you do plan on working for longer, a transition to retirement strategy (whereby you may be eligible to access a portion of your super ahead of retirement) could potentially help you to pay off debt, without reducing your take home pay, or help you to improve your super savings.

7. Seek some assistance

If you need help managing financially, AMP has a support hub, where you can access a range of resources, if you’re experiencing financial difficulty.

Meanwhile, we’ve formed a partnership with financial wellbeing specialist, the Good Shepherd, which is providing meaningful support to our clients, who may be experiencing hardship.

If you need assistance, contact us. 


1, 2 ASFA Retirement Standard – December 2022 figures
Australian Bureau of Statistics – Retirement and Retirement Intentions
The Household, Income and Labour Dynamics in Australia (HILDA) Survey pages 65, 67

Source: AMP April 2023

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