Sometimes when you retire money can be the last thing on your mind.
But approaching your money carelessly or lightly can leave you in a world of financial pain.
Here are three silly mistakes you could be making with your money as a retiree.
1. Spending too much, too soon
It’s hard to resist the urge to spend money once you’ve retired, but spending it all too fast can leave you in a world of financial trouble. Spending too much early on in your retirement isn’t just bad for making your wallet lighter, it also means you miss out on returns that money could have made you into the future over the next five, 10 or even 20 years. So what should you be doing instead? If you’re planning on retiring, you should plan in advance with a financial professional. Look at your superannuation, pension and savings and make a budget for your retirement. If you’re already retired and you’re guilty of spending too much early on, experts recommend you meet with a financial planner to adjust your budget and investments.
2. Taking investment advice from family and friends
Your friends and family may have your best interests at heart, but they may not be the best people to see financial and investment advice from. Pat Grenier of CFP BRP/Grenier Financial Services looks at it like this — “This is like me having a toothache and going to my daughter and saying “how do I fix a toothache?”. While they may mean well, those closest to you are unlikely to be well versed on the latest investment strategies or taxation laws. Instead, you’re better off seeking advice from a financial planner or investment advisor.
3. Not planning your estate
Thinking about your death and what happens to your money and assets when you’re gone can be challenging while you’re off enjoying your retired life. But not planning your estate could have ramifications for your loved ones after you’re gone. Grenier says not having an estate plan can mean you might not be able to transfer your wealth to your family when you die. “It may create huge tax liability, so there’s a lot less for your spouse, partner or kids,” he said. The financial expert also says not tying up your assets can mean they could end up in the hands of someone you don’t want to have them. Haven’t planned your estate yet? All you need to do is have your will drawn up, and select your power of attorney, health care proxy, and the beneficiaries of your financial accounts.