The first year or two of retirement is typically the year of the big splurge. You’ve worked hard, saved and kicked the kids out of home. It’s time to celebrate – and start ticking off that bucket list.

When it comes to taking your superannuation in a lump sum at retirement, Shadow Treasurer Chris Bowen insists that Australians usually make the right decision.

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“The experience in Australia is that people get it,” Mr Bowen said in a recent speech.

“They get a lump sum when they retire, and they realise by and large that it’s got to last till they die.”

Before you start daydreaming about a beach house or overseas trip, here’s what you need to know:

Get in early

Industry Fund Services executive manager of wealth James Grant advises you to start the planning process a good two or three years out from your intended retirement date.

“Many clients plan some kind of expense for that time and the magnitude of that expense is very different from one person to another,” Mr Grant says.

Get advice and be precise

HESTA CEO Anne-Marie Corboy strongly encourages people to consider getting financial advice before dipping into their savings.

“Professional advice can give you a better idea of the potential impact your spending may have on your income and entitlements in retirement.”

Keep in mind that many super funds offer free guidance as part of your membership benefits, so check with your fund to see if you’re eligible.

When you do meet with your financial advisor, preparation is key.

“What helps the financial planner is knowing the type of expenditure you want to engage in,” Mr Grant says.

“If we can get an idea of exactly what you’re looking to do and how much it will cost then we can do the math. The more precise the better.”

Know where you stand

Data from large Industry SuperFunds (ISFs) shows the median balance for active accounts for members aged 60-65 is only approximately $35,000, including both accumulation and pension accounts.

ABS data for the wider population shows estimates of $122,000 per person.

Consider your big spend in relation to your superannuation standing, savings and daily living costs.

Supercharge your super

If employer contributions won’t cut it, take matters into your own hands.

“People should be encouraged to pay off debt and put any excess money into superannuation,” David Whiteley, chief executive of Industry Super Australia, says.

Look into salary sacrificing, government co-contributions and account-based pension products to see what you can add.

Timing is everything

You only live once, so don’t let financial stress hold you back from your dreams.

“One priority is to make sure that a dream trip can be undertaken at a time when you’re physically active and capable,” Mr Whiteley says.

Don’t wait too long to reward yourself for your hard work.

Budget for the “longevity risk”

As life expectancy increases, so does the risk your money will run out before you do. Use current statistics to project the length of your retirement and budget for that period.

Expect the unexpected

No one can predict the future, but you can plan for the worst-case scenario.

Unfortunately, with old age often comes costly medical care. Furthermore, family members can encounter strife and you may be called upon to help them out.

“People should put aside emergency funds that can form different pools of money, like funds that can be accessed within a very short time frame and other funds that can be accessed within a week to two weeks,” Mr Grant says.

This will allow you to stagger your accounts to maintain investments while providing short-term access to funds.

“The vital part is investing with the appropriate risk profile so that you have access to funds without damaging your long-term investment strategy,” Mr Grant says.

Consider a back-up plan

Of course, all splurges come at a cost. If you haven’t accurately predicted this, you need to consider how you will recover.

Options include a return to the workforce, accessing government assistance or selling your assets.

Know your limits and plan accordingly.