How to Avoid Common Retirement Pitfalls
Saving for your retirement is a long slog. When you’re in your 50’s and 60’s, you know you’ve worked long and hard for all you’ve achieved in life. You probably have a fair idea of how you want to live during your retirement. However, it’s important not to become complacent, and to actively work towards ensuring you have enough money to retire the way you want. Below are 8 common money mistakes often made towards retirement, and how to avoid them.
1.Accessing your super too early.
One of the most common mistakes made towards retirement is taking from your super too early, as soon as you reach 65. This can leave you short of a safety net when you need your savings the most.
To avoid falling into this trap, ask yourself:
- How long am I going to need to live on my retirement funds?
- How much do I have in my super, and is it enough to live on alone?
- If not, how else can I supplement my income?
2.Underestimating your retirement.
It is a common oversight not to prepare far enough in advance for your retirement. It will help substantially if you start learning about how to prepare for your retirement and start thinking about ways you can boost your retirement savings now.
If you are aged over 55 and still working, you can work less hours for the same income, or continue working the same hours to give your super a tax-effective boost. If you’re wondering if this strategy is right for you, give us a call
3.Counting on the Age Pension.
While it may seem appealing to survive on the pension alone, this will only provide a very basic standard of living in your retirement.1 If you want to be able to afford a few luxuries, such as the occasional holiday, it’s worth finding out more about saving for your retirement.
4.Not claiming your entitlements and government benefits.
Make sure to stay aware of any entitlements or benefits you can take advantage of to stretch your dollars further into retirement.
5.Being unaware of investment risks.
Simply because you are nearing retirement does not entail putting your retirement savings at risk for higher returns. Make sure you have a diversified portfolio and are aware of warning signs for investment risks.
6.Not accounting for adult children and aging parents.
People in their 50’s are sometimes referred to as the ‘sandwich generation’, where they’re tasked with supporting their own children as well as their parents. Make sure to account for this as you continue to save for your retirement.
7.Prioritising your home loan over other debt.
It’s no use building your retirement fund while you still have financial pressure from other debts hanging over your head. Consider prioritising other debts before tackling your home loan, or consolidating all of your debts into a home loan with a lower interest rate.
8.Not maintaining a valid, current and legally binding will.
Having such a will removes the burden on your loved ones, and avoids any confusion following your passing concerning how you want your assets to be distributed. If you decide to write your own will, ensure it is checked by a solicitor, otherwise your beneficiaries may not receive any of your estate. Check your appointed executor knows exactly where your personal documents are kept, and that they are fully aware of their responsibilities.
If you need assistance with any of these problems, contact us to discuss your personal circumstances, and ensure you retire with the funds to live however you’d like.
1 http://www.superannuation.asn.au/resources/retirement-standard
7Wealth Pty Ltd ABN 44 609 210 246, is an Authorised Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706
This blog contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/ or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.
July 11, 2018
