6 things people get wrong about retirement
Here are five things people typically get wrong about retirement.
1. Not having a solid plan
This is the number one piece of advice for retirement – make a plan well before the day arrives. This plan needs to cover everything from the big issues like money to health right down to things like how many cars you will need to keep or how often you will offer to look after grandchildren. A good, comprehensive plan will make your retirement years that much easier.
2. Overestimating post-retirement income
Just because you've stopped working, that doesn’t mean that your ongoing income is now zero. Most retirees will continue to get money from a pension or super fund, investments, rental properties or other sources. Just be aware that you need to calculate exactly how much you will receive each month (or year) and spend accordingly. Be sure to factor in market variations or potential down times, like having a rental property sit empty.
3. Assuming you will stay in good health
When you are healthy, it’s easy to imagine that things will always stay that way. But illness can appear suddenly and change your whole life. Serious medical issues can impact your wealth and happiness, and while Australia has an excellent public health system you should still think carefully about maintaining private health insurance.
4. Thinking you will automatically spend less
If you’re not going out to work every day, you may think you will save money with no more train fares or parking, no lunches to buy and no fancy work clothes. Don’t assume that your spending will automatically decrease once you retire – there are still lots of ways to splash your cash. Set yourself a realistic budget and stick to it.
5. Putting your money in the wrong place
There are lots of places to keep your money, but choose the wrong ones and you could lose out in the end. It is tempting to keep everything in a stable, low-yield account to avoid any losses in a falling market, but inflation will ultimately eat away at your nest egg. You also need to be careful of tax implications around super and capital gains. Speak to a financial advisor and make the best decision for you.
6. Falling victim to scams
Unfortunately, retirees are one of the groups most likely to be targeted by a scam. These complex frauds can take many forms – online, over the phone, through the mail – and almost anyone can be tricked into parting with their money. Be very, very careful about giving your details to a third party or signing up for any offers that seem ‘too good to be true’.
Is there anything you got wrong about retirement?
Any advice contained in this communication is general advice only. None of the information provided is, or should be considered to be, personal financial advice.