How not to make these five common retirement mistakes 32



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Approaching retirement should be a time of happiness and anticipation of good times to come… but one in three retirees wish they’d spent a little less time practising their golf swing and a little more time planning for the future.

According to HSBC’s Future of Retirement research, a whopping 36 per cent of Australians who are already retired feel their preparation was insufficient – don’t count yourself as one of them by avoiding making these five common mistakes.

1. Hoping everything will be just fine

Also known as “putting one’s head in the sand”, taking the hope and see approach is definitely one to avoid. Even if the words “financial planning” make your brain melt out your ears, making some effort to understand what you’ll need and how you can accrue it is 100 per cent worthwhile.

Women are the worst for this, according to Katie Marshall, who is the director investment company of Chicks and Mortar, with many choosing to pretend retirement isn’t on the near horizon.

“They know it’s there and it’s coming up but they kind of feel like they’ve left it too late so they still don’t do anything about it,” she told The New Daily.

2. Not working out how much you’ll actually need

Some people find budgeting fun. Most do not… However, failure to understand how much you will actually need in retirement can leave you short. The HSBC research found Australians were the most likely to experience a shortfall in retirement funding. While people expect their money to  last an average of 23 years, the research showed they actually only had enough for 10.

At some point soon, you need to sit down and visualise the lifestyle you want in retirement, then add up what you’ll need on a day-to-day basis, and also taking into account everything from birthday presents for grandkids to overseas holidays and hip replacements. Which brings us to….

3. Forgetting to account for inflation 

Twenty years is a long time, and costs are going to go up. If you calculate that you’ll need $45,000 per year for you and your partner to have the lifestyle you want, remember that will look more like $50,000 a few years in.

4. Not looking at the whole picture

Watching the balance on your super fund or keeping up with the current age pension rate is one way to manage your retirement income. Or you could take a more active approach and work out how best all your assets as a whole.

For example, is the best option withdrawing all your super and putting it in the bank? How will that affect your pension? Will you still get a concession card? Another example is challenging the common wisdom that your mortgage must be paid off before you retire. Does that apply to your circumstances? What if your mortgage interest rate is significantly lower than your investment interest? In other words – how can you arrange things so your money is working as hard as possible for you?

5. Not asking for help

Most people wouldn’t service their own car or give themselves a medical check-up, so why do we baulk at the idea of asking for help with our finances?

It’s understandable to feel wary, after all, big names like Macquarie Private Wealth, NAB and CommBank were all embroiled in financial advice scandals in recent years. So how do we get around this? Talk to people – ask friends and colleagues if they have a financial advisor they trust. Shop around and be wary of anyone that offers a quick fix or unreasonably high returns.

How are you planning for retirement? And for those already there, what advice do you have to share?

Starts at 60 Writers

The Starts at 60 writers team seek out interesting topics and write them especially for you.

  1. The advice is all well and good but what about those of us without much super at all? I was about to take mine out and put in bank. Centrelink says I don’t have enough to affect my pension. Then when I looked into it, I could leave it in the pension fund with my super company and it would make more for me each year than the bank interest. I take a tiny amount out each year which helps me catch up on power etc. Believe me, it is a.very tiny amount.

    7 REPLY
    • I would be wary at the moment with whatever your doing, there is talk of them changing Hockey with Morrison to try to save Abbotts hide, none of us know what new laws they will impliment with our super while the Liberal Government is in power, very uncertain and unsettling times

    • I have a very small super fund. I still work 3 days a week and they are still paying into it but when I retire completely what I have is coming out and going into a bank account. I never earned enough on a full time wage to put extra into it myself.

    • I finished working no job had money invested in a house ,the bank had loaned me the rest of the sum which was termed as a asset plus the rental i got ,our pension was less than half ergo we spent most of our savings, its corupt in the UK your pension is yours even if you have millions .

  2. Too late for us , my hubby had to finish work age 57 due to multiple health issues. We had a very small super and we used that to clear some of our debt. We still have a small housing loan $236 a month. No matter how you look at it , it is still cheaper than rent. There will be no trips or cruises. However we will still have beautiful family get togethers. We struggle to make ends meet, but we never starve. We no longer buy our clothes from our favorite shops, but we do have some great outfits thanks to our local op shop. Spare money we rarely if ever have. However we have all we need and treasure each day. As parents to three adult children and 7 grandchildren we are trying to instill in them a culture of saving , of not wanting the best of everything , of paying their debts and saving for what they want . Finally we have instilled in our children that super is important for ones future and that they need to put as much as they can away for when it is needed most. How you plan for the unexpected events in ones life , well that is another story. Cheers

  3. We never had the opportunity to pay super not that we couldxafford it.never really thought about retirement until it was too late

  4. Because I was never earning enough for my employer to pay into Super for me until 1997, I found what worked for me was to salary sacrifice as much of my income as I could which I have to say was difficult at the time because the nature of my job was working with school kids over 40 weeks of the year, although I did struggle back then it is now that I reap the benefits, the decision made the difference of me being able to cover all my bills and still have enough to put aside for a holiday if I want.

  5. Did all 5 and some. I’m a Planner Trainer by temperamant so I had been working on R day for about 5 years. Actually that was the amount of time I had spent squirreling away the money so that I could retire.

    The one thing I knew I would have to cope with was living on approximately 10% of the income I was on on the day I retired. I’ve dfone quiet well. I have about 15% more in my super fund than what I had 17 years ago. However, when one deflates it by inflation it’s about 70+% of what I started with.

    However I know a lot of people who did not adjust their spending and expectations who are in a pickle financially and as a result of not following the points have the poos and say “Why me?”

  6. I would add to that, not beginning saving when you are in your 20s. I wnt to a retirement seminar put on by my employer a while ago. All the grey hairs were there and one young person. It rapidly became apparent that it was the young person who could benefit most from the advise that was given.

  7. I might consider taking up golf if it helps to take my mind off retirement. The article suggests that a figure of $45,000 per year might not be enough. Well forget that, because I have calculated that over 20 years my meagre super will only provide $8,400 per year (providing I do not lose anymore). However, if the GFC and 2015 meltdown hadn’t lost me more than $25,000 I would be in a much better position. PS: have parked it in cash until the Chinese have finished with their crisis.

  8. Did all the planning. Retired slightly early due to health. Now the Govermnent wants to move the boundaries!!! We’d factored in getting some pension when at age. My advice would be don’t bother unless you will retire with high$$$$$ just enjoy your life.
    We went without lots of travel etc in the last few working years to salary sacrifice , thinking the travel would come after. Not going to happen quite the same now

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