Avoiding the Pitfalls The Biggest Retirement Planning Mistakes for Self-Funded Retirees
Retirement planning is a bit like a long road trip. It’s exciting, sure, but it also requires careful preparation and navigation. Just as you wouldn’t set off on a cross-country drive without a map, you shouldn’t venture into retirement without a solid plan. Unfortunately, many people do, and they end up making some common mistakes that can derail their journey. Let’s explore these pitfalls and how to avoid them.
Understanding Superannuation
Superannuation, commonly referred to as “super”, is a crucial part of retirement planning. It’s a way to save for your retirement while you’re still working, and it’s generally compulsory for Australian employers to contribute to your super.
We chat to people from all walks of life, it is very common that people don’t know what super fund they have, how much the balance or what they are investing in.
In the years leading up to retirement using superannuation as a tool can be the difference between watching your pennies or having the retirement of dreams.
Investing Correctly
Investing is another key aspect of retirement planning. But it’s not just about throwing your money into the share market and hoping for the best.
To avoid this, diversify your investments. Spread your money across different asset classes such as cash, bonds, shares, property & alternative assets. And remember, it’s never a bad idea to seek advice from a financial adviser.
The Risk of Retiring Too Early
Retiring too early can be tempting, especially if you’re feeling burnt out. But it’s a decision that can have significant financial implications.
Before you decide to retire early, make sure you’ve considered all the financial factors. And remember, working a few more years can significantly increase your retirement savings.
Prior to our a clients retiring we conservatively project out the longevity of retirement assets and when Centrelink benefits such as the Age Pension would kick in. This gives our clients confidence in their decision to retire.
The Trap of Overspending
Retirement is a time to enjoy the fruits of your labour. But that doesn’t mean you should throw caution to the wind when it comes to spending.
It is all too common for people to retire and immediately go and purchase a new car, make major renovations or take large holidays. They live the high life for a few years before they have to drastically cut back their lifestyle or return back to the workforce.
To avoid this trap, create a realistic budget for your retirement and stick to it. Factor in your regular expenses, but also account for fun activities and unexpected costs.
Making the Most of the Age Pension
The age pension can be a valuable supplement to your retirement income. But many people don’t fully understand how it works or how to make the most of it.
As Financial Advisers we assess your eligibility for benefits such as the age pension and other entitlements. For instance, we run some analysis for a prospect who checked the Centrelink and would only get $50 per fortnight. With some adjustments we were able to get them nearly $400 per fortnight.
Don’t make assumptions about the age pension. Do your research, understand the eligibility criteria, and consider seeking advice from a professional.
Conclusion
More Financial Education
We have written an article about superannuation, what it is and how it works.
Want Professional Financial Advice?
We offer a complimentary 30-minute meeting to talk through where we can help.
We are a Brisbane Financial Advice practice, and we can service clients nationally over the phone or via online calls.
Superannuation Calculator
Using Government Resources such as the Moneysmart Superannuation Calculator can help you see if you are going to have enough in your Superannuation fund in retirement.
Please note that this article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and seek professional advice before making any investment decision.
This information is true and correct as of 28 July 2024, prior to making any changes we recommend you read Government resources and seek Financial Advice prior to making any changes.
Book Today
Book a complimentary meeting with us today to see where we can assist you.