Retirement is really hard to navigate. But what is it exactly that makes it so difficult?

For most of our working lives, once we make life decisions, the following impacts to our superannuation and our income are automatic or even quite passive. We get a job, our employer pays us a salary that we spend on living costs and takes 11 per cent super out. We never really miss it.

Super through our working life is relatively straightforward. The retirement phase is far harder to navigate.Credit: Simon Letch

It goes into a super fund which we can choose, or they’ll choose one for us, and we actively, or passively invest that superannuation to drive compound growth for our future retirement. If we don’t specify our investment preferences, our fund is obligated to invest that into a default fund which, quite frankly, has offered strong returns over the long term.

The accumulation system of superannuation has generally served all of us well. The retirement phase of superannuation presents an entirely different situation.

It’s hard to understand because none of the decisions are made for us by the system. Suddenly, each of our big life decisions demands us to pay attention and take actions ourselves. And, what makes it harder is that there’s no easy way to predict what the later-life impacts of our decisions will be without trying to use a crystal ball. So let’s look at the decisions that feel difficult.

When and how to step away from work. The decision to stop work usually drives a waterfall of other choices around superannuation. Think of this as a two-part process.

For many retirees, this is the first time they’ve managed multiple layers of passive income from a couple of different sources.

The first part is considering when to step back from full-time work, into a more part-time capacity. The second is contemplating when to give up work altogether. Each choice rolls you into a series of other choices as a result.

Whether to use a transition to retirement account in pre-retirement. Once you decide you want to slow down your work a little, you might then contemplate where to draw some top-up income from.