How to manage debt to prepare for retirement

Sorting out debt is a great way to take control of your future. While retirement may seem distant, managing your debt could help you reach it sooner. And you’re not alone. There are different options to explore and AustralianSuper can help you access advice¹ to make a plan that’s right for you. Whatever your path to retirement, we’re with you.

How to tackle debt

Managing debt starts with making it a priority. While you’re still working, it can help to focus on paying off your debts as a way to prepare for your retirement. Even small changes can make a big difference.

Budget wisely

Create a detailed budget of all your income and expenses. Look for areas where you could free up extra funds to pay off some debt – is there anything you could give up for a little while? Be realistic about what you can commit to.

Assess and prioritise your debts

Get a full picture of what you owe. Make a list of all your debts and put them in order from highest to lowest interest rates. Paying off the high-interest ones first can reduce the total amount you’ll pay over time.

Consider consolidating debt and refinancing

If you have multiple debts, explore refinancing options or whether you could combine them into a single loan with a lower interest rate. This may help lower your repayment amounts and save you money.

Revisit and reassess

Financial circumstances can change rapidly. Staying on top of your budget and debt goals can help you quickly make any adjustments you need to stay in control.

Explore other resources

For more practical tips and tools to help you work towards a debt-free future, visit the Money Smart website.

The importance of paying off debts before retirement

You might be planning to wait until you retire to pay off your debt when you access your super but paying it off sooner could save you a lot in interest payments. You also need to think about how you plan to fund your retirement. Using super to pay off debt at retirement may be an option, but will it be the best option for your circumstances?

‘Ideally, we don't want to use our super to pay off debt…Generally, it's always a good idea to start hacking away at those debts, and that's especially because of the power of compounding interest on that loan.’²

– Fern Havea, Financial Planner, AustralianSuper

While you're at it, check your super

Simple actions could help make more of your super. If you have more than one super account, consolidating your super³ into one account could save you from paying multiple sets of fees. Or you might have lost super that you could claim to boost your super savings.

Getting the right advice for you

The journey to retirement is unique for everyone, especially when debt is involved. AustralianSuper is here to support you with tools, webinars and access to advice options to help you prepare for retirement - and manage debt.

Simple advice

As an AustralianSuper member, you can get general and simple personal advice about your super account over the phone⁴, such as making an investment choice and understanding your retirement income options. Most over-the-phone advice about your AustralianSuper account is included in your membership at no additional cost.

Get in touch

Comprehensive advice

You can meet with a financial adviser for more comprehensive advice¹, like creating a tailored debt repayment plan. Your first meeting is at no additional cost and focuses on understanding your personal financial circumstances and goals. No advice is given in the first meeting. If you choose to proceed, the cost will be agreed upfront in writing. If the advice only relates to your super, you can pay for it from your AustralianSuper account.

Find an adviser

Disclaimers
1. Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Some personal advice may attract a fee, which would be outlined before any work is completed and is subject to your agreement. With your approval, the fee for advice relating to your AustralianSuper account may be deducted from your AustralianSuper account subject to eligibility criteria.
2. Fern is an authorised representative of Industry Fund Services. AustralianSuper has engaged Industry Fund Services Limited (IFS) ABN 54 007 016 195, AFSL 232514 to facilitate the provision of financial advice to members of AustralianSuper. Advice is provided by financial advisers who are Authorised Representatives of IFS. Fees may apply. Further information about advice services is in the relevant Financial Services Guide, available by calling 1300 138 848. IFS is responsible for any advice given to you by its Authorised Representatives.
3. Before making a decision to combine your super, consider any fees or charges that may apply, and the effect a transfer may have on benefits in your other fund such as insurance cover. We recommend you consider seeking financial advice. If you wish to claim a tax deduction for personal super contributions, you must lodge a notice of intent to claim a tax deduction with your other fund before you combine your super.
4. There’s no charge for general advice about your super account. The financial advice you receive will be provided by MUFG Retire360 Pty Limited ABN 36 105 811 836, AFSL 258145 and will be their responsibility. Personal advice provided may attract a fee, which will be outlined before any work is completed and is subject to your agreement.