Why you should build the capital required to support your retirement first

Most people don’t realise how easy it is to aim at the wrong target. In your 40s or 50s, the priority isn’t deciding exactly how many properties you’ll own or how your super will be allocated.

It’s to build the capital required to support your retirement in the first place. That doesn’t mean structure doesn’t matter — it does. But whether you build through super, property or shares, the most important step is setting a clear goal and working steadily toward it.

At First Financial, we provide tailored planning that reflects your individual circumstances and aspirations. Rather than fixating on specific asset types, we focus on long-term flexibility because, as your situation shifts over time, so too will the most effective way to structure your wealth. Adjustments are not only expected but often essential as you move into the next stage of life.

Defining a clear capital target provides a reference point for decision-making throughout your peak earning years. It offers direction without locking you into rigid assumptions about how your future needs to look. With that figure in mind, it becomes easier to make purposeful, steady progress, even as circumstances change.

Your capital determines how much income you can draw each year, and how sustainably you can withdraw it. This directly shapes your lifestyle and financial freedom in the years ahead. A useful guide to estimate this total capital target is the rule of 20: simply multiply your desired annual income by 20. For example, if you’d like $100,000 per year, you’ll need around $2 million in capital assets.

Defining a realistic target helps sharpen your financial focus during your peak earning years, typically midlife. It’s the ideal time to use that capacity to accelerate capital growth. A clear figure gives structure to decisions around contributions, investment strategies and savings habits, and reduces the risk of distraction or hesitation along the way.

It’s one thing to set a target; it’s another to know what it’s meant to fund. A capital figure pulled from thin air won’t give you lasting confidence. That number has to reflect the kind of life you want to live and the commitments you expect to carry into later years.

Retiring isn’t a fixed expense, and people have different needs and wants across each phase of life. Your cost of living at 65 is unlikely to be the same as it will be at 85.

The earlier years often include travel and other lifestyle-related spending, while the later years can bring increased healthcare or aged care costs or reduced expenses. A strong capital plan takes this variation into account.

A considered capital target should leave space for uncertainty. Even with clear expectations, life rarely unfolds as expected. Flexibility built into your figure gives you the ability to respond, not just react, as circumstances change.

At the accumulation stage, the type of asset you choose isn’t the main concern. What matters is that your approach suits your income, risk tolerance and time frame. Super, property and shares are all valid vehicles for growth, and each offers distinct benefits, from tax concessions in super to potential capital gains and rental income from property to the liquidity and accessibility of shares. The key is consistency and making choices that fit your situation.

Trying to refine the perfect investment mix too soon can be more of a distraction than a strategy. At this stage, your effort is better spent building momentum toward your capital target than constantly adjusting your allocations.

The real value in choosing an asset mix at this stage is that it gets your capital working. As long as the structure supports regular contributions and suits your current financial position, it’s doing its job. The details can evolve.

In the end, the assets that help you build toward retirement may not be the ones you rely on once you get there. Plans often change along the way, and some level of asset rotation is not just common but necessary. Strategies focused on growth tend to suit the accumulation years, while the later stage requires a shift in focus. As retirement approaches, the goal moves from maximising returns to producing steady, accessible income.

This shift means you can reallocate into income-generating and lower-risk assets that are stable, such as dividend-paying shares, term deposits or annuities. This doesn’t mean abandoning growth entirely, but rather finding an acceptable balance to support your lifestyle while still managing risk.

The shift from accumulation to drawdown may happen gradually or all at once, depending on how you choose to retire. Either way, it takes planning. A smooth transition helps maintain financial stability while allowing you to respond to changing needs without undermining what you’ve worked hard to build.

The right retirement plan won’t lock you into one way of thinking. It should be flexible enough to grow with you and give you direction with purpose. Start by defining what your ideal retirement looks like, then work out what it will realistically cost, with a fair buffer included. That becomes your target. The path to reaching it will look different for everyone, and that’s exactly how it should be.

At First Financial, our client-centric approach means we get to know your circumstances, goals and priorities and design a personalised road map to get you there. Our focus is never on checking off an asset checklist, it’s on making sure your building the capital you need for retirement first.

To learn more about our retirement planning or investment management services, contact our friendly, experienced team today.

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