Back in the day my husband and I ran a publishing business. He was very good commercially, I was studying journalism so, by default, I found myself creating content. One day he and our accountant had the bright idea that we should buy a retirement magazine.

Seriously? I was in my early 40s and had no affinity whatsoever with writing about matters of interest to older people. Or so I thought.

Of course, I was overruled, and we bought it and within a short space of time converted the print edition to a website, eventually growing the subscription database to 250,000 baby boomer readers.

And I ended up writing about the various life stages of retirement for the next 20 years.

I’m now at the very pointy end of that demographic and actively managing our own retirement savings.

Here are five things I’ve learned along the way.

1. Get out of denial, fast

Moving from denial of ever retiring into planning for this life stage is the first step. If you are lucky enough to live a long time, it’s highly likely that you will need to manage the transition of your retirement income from accumulation mode to decumulation. This is not a bad thing. But assuming you don’t need to think about it now is a huge error.

Part of denial is a vague hope that we won’t grow old. It’s a childish thought, at best, because the corollary is that we’ll die young. But many of us look at advertisements for retirement planning and see silver-haired couples strolling on sunlit beaches and feel no sense of connection at all.

That’s okay. Why would we? Most of these images of aimless couples are often neither relevant nor aspirational. But the plain truth is that we probably will, if lucky, have an active early and mid-retirement life, with perhaps a few later years when we will need more support.

The greatest favour we can do ourselves is to ensure that we have enough in the kitty to maintain our independence and allow us to have choices. The two most important assets in any retirement are not your super or your home, but your health and independence, the combination of which ensures you have choices.

2. Know the detail

After moving from denial, the next part of the puzzle is another thing that many of us avoid. And that’s getting our heads across the detail.

When we first started publishing the retirement magazine, I recall an editor reporting that deeming rates were one of our most read topics. My eyes rolled in their sockets. Who cares, I thought? I couldn’t have been more wrong.

With nearly three out of four Australian retirees affected by these government calculations on their assets, deeming rates remain a hot topic indeed. There is a lot of similar detail which needs to be understood across the spectrum of retirement income.

You don’t have to know each and every rule, but you do need to know about the main pillars of income – superannuation, the Age Pension, household equity, private investment and work income. And how these moving parts can and do combine to create income streams in your later years.

Why not start with the detail of something tangible, for instance, your super? Top of head, do you know:

  • your current balance?
  • your net super increase over the past financial year?
  • how much you are likely to contribute this financial year?
  • what your balance is likely to be in the year you plan to retire?

This is very entry-level information. But it’s surprising how many don’t know these numbers. And knowing them is a first step to accurately forecast your likely retirement income.

Knowing the detail is clearly not confined to just your super. As noted above there are at least five main sources of retirement income, all with rules and opportunities attached.

This step-by-step guide from Morningstar's Mark LaMonica can help you calculate how much you need to retire.

3. Ask questions

To fast-track your knowledge of the necessary detail, it’s important to educate yourself.

This is easier than it may sound. When we moved our print magazine online, I had no clue about running a website or sending e-newsletters. I had to learn, fast. So I took in information from everywhere. I spoke to those who knew, I read technology updates in newspapers and specialist magazines, attended conferences, and ‘googled’ most of the rest. No question was too dumb in my learning journey. It’s the same with retirement income. It’s complex and scary from the outside, so Q&A articles are your best friends, offering bite-sized insights into how others manage the building blocks of their savings.

It helps, of course, to have a good accountant. Given their access to your longer-term income and outgoings, they can talk you through ways of better managing both, particularly within the rules that leverage your assets or income to increase your retirement nest egg. Using such rules while you are still in the workforce is the best plan, particularly when you are at, or near, peak earning capacity. Ask your accountant about the many ways to contribute to super beyond the more obvious Super Guarantee or salary sacrifice.

Educate yourself now about Bring Forward rules and Downsizer Contributions. Or how a younger spouse strategy works? Are any of these strategies suitable for you right now? Or something to factor in for later? What about household equity? Or managing a mortgage? Should it be paid down, or should more money go into super? Yes, like other homeowners, you may feel that rapidly rising interest rates are all that you have headspace for right now. But how your home, your mortgage and your net household equity combine now and how they might work in the future are of critical importance.

Start asking questions like these and don’t assume you know all the answers. The rules can change and frequently do.

4. Know how much you spend

Now that’s an uncomfortable thought, isn’t it? If it’s not, then congratulations, you are probably managing your household budget very competently. (Or in blissful ignorance, but that’s another story).

If, however, you don’t know how much you regularly spend then you are reducing your likelihood of maximising your retirement income. Now is the time to change things.

Yes, it was much simpler pre-easy credit days when the cash in your pay packet ran out, you were forced to stop spending. Now widespread access to credit means most of us can overspend – a lot – before things catch up with us.

Living within your means is powerful. Knowing if you are not, is equally important.

This clearly means you will need to do your sums. The advent of fintech applications means that most of our spending has already been categorised and calculated by our banks. Based on this head start, you can make your household budget as complex or as simple as you like – but living within it is non-negotiable. And once you’ve created a basic budget, the really hard work is out of the way. You now just need to honour it by keeping it up to date and making the hard calls if there is a net deficit.

The most ironic aspect about keeping a household budget is how determined most of us are to avoid it. But how much easier life gets once we finally start.

5. Embrace delayed gratification

The fifth thing I’ve learned about retirement income is not really financial at all, but it does influence our behaviour and can encourage a steady progression towards higher net wealth.

Best-selling US psychologist, M Scott Peck noted in the opening lines of his book, The Road Less Travelled, ‘Life is difficult’.

Isn’t it just? But Scott Peck went on to explain the undeniable benefits of delayed gratification, citing research which demonstrates that those willing to work for their rewards generally feel better and do better across life’s journey.

This feeds into the power of compound interest, a marvel of mathematics celebrated by those with proven financial track records.

Put simply, compound interest occurs when you earn interest on interest on your original principal, and so multiply your gains over and above the original inputs – as long as you leave your money in the kitty.

That’s where delayed gratification kicks in. It’s knowing that putting extra into savings and leaving these amounts in place is a sure way of growing your nest egg as steadily and successfully as possible, despite market fluctuations. (The principle of compound interest is neatly explained on the government’s Moneysmart website.)

There’s a reason why financial experts love the power of compounding, and that’s because it works.

And one more thing

You may have noticed that I haven’t mentioned the need to see a financial planner. There’s a reason for that.

I’m not convinced that a wholistic financial plan is necessarily the answer if you haven’t done the hard yards first. A good financial planner can be a helpful partner, but not until you know your own situation inside out.

And maybe that’s the sixth and best takeaway – when it comes to money, how well do you know yourself?