How to Balance Paying Off Debt and Boosting Super Before Retirement

As retirement approaches, many Australians face the same financial dilemma:

Should I focus on paying off debt, or should I be putting more into super?

The answer isn’t always straightforward – because both can play a major role in creating financial security in retirement. The key is finding the right balance based on your personal situation, timeline, and long-term goals.

With the right strategy, you can reduce financial stress today while still building wealth for the future.

Why This Balance Matters in the Years Before Retirement

The years leading up to retirement are often your most financially powerful – but also the most complex.

You may be:

• Earning at your peak
• Carrying a mortgage or personal debt
• Thinking seriously about retirement income
• Wanting to maximise super contributions
• Planning how to live comfortably without a salary

Every financial decision made in this stage can have a lasting impact.

That’s why balancing debt reduction and super growth is so important.

Step One: Understand the Types of Debt You Have

Not all debt should be treated the same way.

Before deciding where to focus, it helps to break debt into categories:

High-Interest Debt

This includes:

• Credit cards
• Personal loans
• Buy now, pay later accounts

These debts often come with high interest rates and should usually be prioritised first.

Mortgage Debt

Home loans typically have lower interest rates and may be more manageable – but entering retirement with a mortgage can affect cash flow.

Investment Debt

If debt is linked to an investment property or portfolio, interest may be tax-deductible, which changes the strategy.

Knowing what kind of debt you have helps determine what should be tackled urgently and what can be managed over time.

The Case for Paying Down Debt Before Retirement

Reducing debt can provide peace of mind and more freedom in retirement.

Benefits include:

• Lower monthly expenses
• Reduced reliance on investment returns
• More flexibility with cash flow
• Less financial pressure during market downturns

For many retirees, entering retirement debt-free creates a stronger foundation – especially when living on a fixed income.

The Case for Boosting Super in Your Final Working Years

Superannuation is one of the most tax-effective ways to build retirement wealth.

Increasing contributions in the years before retirement can offer:

• Tax advantages through concessional contributions
• Higher retirement savings
• Compounding growth over time
• Greater retirement income options

Even small additional contributions can make a meaningful difference over a 5–10 year period.

A Balanced Strategy Often Works Best

In many cases, the smartest approach isn’t choosing one over the other – but combining both.

For example:

• Pay off high-interest debt first
• Continue making steady super contributions
• Redirect freed-up cash flow into super once debts are reduced
• Review mortgage repayment plans before retirement

A tailored strategy ensures you’re reducing risk while still building wealth.

Planning for Retirement Requires More Than a Simple Rule

There’s no one-size-fits-all answer.

Balancing debt and super effectively depends on:

• Your age
• Income
• Debt levels
• Retirement goals
• Tax position
• Investment strategy

Working with a financial adviser can help you make confident decisions and avoid missed opportunities.

Create Confidence Heading Into Retirement

The transition into retirement is one of the most important financial stages of life.

With the right plan, you can:

• Reduce debt
• Strengthen your retirement savings
• Improve long-term cash flow
• Retire with clarity and confidence

The goal isn’t just to retire – it’s to retire well.

Inovayt can help you build a strategy that balances today’s priorities with tomorrow’s security. Get in touch today to start your journey!

FAQs

Should I pay off my mortgage before retirement?

Not always. Some people prioritise being debt-free, while others may benefit from investing surplus funds into super. It depends on cash flow, interest rates, and retirement income needs.

Is it too late to boost my super in my 50s or 60s?

Not at all. The final working years can be some of the most effective for making additional contributions, especially with tax advantages available.

What debt should I pay off first?

Generally, high-interest debt like credit cards and personal loans should be prioritised before focusing on lower-interest mortgage debt.

Can I do both – pay down debt and contribute more to super?

Yes. Many people use a blended approach, paying off costly debt while making consistent super contributions.

When should I seek professional advice?

Ideally, 5–10 years before retirement. Early planning gives you more options and allows you to maximise both debt reduction and retirement wealth strategies.