Retirement planning is difficult because of the numerous competing financial obligations we have, so it must be prioritised. Further, retirement plans should never be based on assumptions that have never been questioned.

Here are four observations for those that are contemplating retirement and the monstrous process of planning for it.

1) Retirement is a journey not a destination

Life expectancy for Australian’s is now over 80 years for men and 84 for females. That is just the average! If you are in good health, exercise regularly, eat healthily and do not suffer from any chronic diseases, there is no reason why you should not reach your 90’s

The math is simple here: if you choose to retire at the age of 65, your retirement period may well last for more than 20 years.

Retirement is not simply a vacation. You cannot be on holiday for 20 years. Retirement is neither a destination or a stopping point. It is just a completely different way of lifestyle to the nine-to-five race routine. In simple terms is more a transition that requires forethought, planning and adjustment.

2) Inflation will kill your Cash

There is a common assumption that because of the well-documented risks associated with shares and property, individuals need to get out of equities and property into safer investments such as fixed interest once they retire. But inflation never retires and will continue to do what it does best in chipping away at the value of your savings.

Hence some growth asset exposure will always be necessary. Of course, this decision should be taken after looking across the board at all the sources of income (pension, dividends, interest, rental income, annuities), all the assets and the overall allocation.

3) Retirement is Multi-phased

Professor Robert Atchley of Miami University, Ohio, developed six descriptive phases of retirement that represent a transitional process individuals go through when they permanently exit the workforce.

While they do not apply to everyone, they do convey the message that to view retirement as one long life phase is rather naïve.

It could be a very long stage, depending on the age you actually retire and your life span. But it is a multi-phase journey depending on your health, the health of your spouse, death in the family, the state of your finances, and so on and so forth.

Tied in to this subject is the notion that spending will be the same throughout retirement. Not so. Initially, a lot may be spent on travel. As time goes on, spending tends to concentrate more on health issues.

4) You do not need 80% of pre-retirement income

Morningstar's vice president of research, John Rekenthaler wrote about the 80 per cent savings myth. He says the notion that an 80 per cent replacement rate of pre-retirement income is required for a successful retirement is wrong.

The point he makes is that once you retire you pay less tax, you have no loans to service, no longer have to worry about keeping money aside for your children's education and are no longer saving huge amounts for retirement.

The ASIC backs this up. They say high income earners should assume they will need 67 per cent (two-thirds) of their income to maintain the same standard of living in retirement. For those with a modest expectation the percentage may be significantly lower!

What you have to figure out is the lifestyle you plan to lead. Some may just want a reliable car, while others may want a Mercedes-Benz. You may want to buy designer clothes and eat in expensive restaurants. In that case, ensure your savings plan accommodates such a lifestyle. Take some time to map out what your expenses may be in retirement to ensure you're accumulating enough to support them.

Retirement planning requires a clear-eyed analysis of future needs and income. Don't fool yourself by making the wrong assumptions. There is no substitute for sound financial advice!