In Part 2 of Chris Bradshaw’s Retirement mini series, he focuses in on six common mistakes people make when it comes to funding Retirement. Our Financial Advisers have been witness to these through our long tenure in providing financial advice and we hope by sharing this information it can help you all make better decisions. The six common mistakes are:

  1. Working too long.

Lets start with Cosca’s definition of retirement, doing what you want, when you want with who you want. Retirement doesn’t necessarily mean having to stop work, if you are working because you want to, then you are already there.  Working out of fear of not having enough is a different story.

In our experience there is a good chance you will work longer than you have to, the question is do you want to? It is best to take a conservative approach with retirement, however most people are generally too conservative and as a result lose the best years in their lives’, their 60s, through working too long.  Mobility plays a significant part in your ability to do what you want to do, statistics indicate mobility begins to decline from age 75. Don’t waste your best years working.

2. Failing to consider inflation.

Just about everything costs more with time. Neglecting to account for inflation in your retirement plan can have profound and detrimental consequences on the financial security you envisioned for your retirement. Inflation erodes the purchasing power of money over time, meaning the cost of living steadily rises. Failing to factor in this inevitable reality when crafting a retirement strategy, your nest egg may fall short

3. Not factoring in social security.

For many of us the Age Pension will provide at least a partial level of support through retirement. Whilst eligibility requirements will change over time, the payment will remain an integral pillar of many retirement plans.

So why doesn’t everyone apply? Well to put it simply, they do not expect to be eligible, or alternatively find the application process overwhelming and it gets put into the too hard basket. Forgoing thousands of dollars.

Ignoring Age Pension entitlements may mean you are working an additional decade and through the best years of your retirement.    

4. Focusing on investment returns as opposed to understanding expenses.

Outperformance in the investment market is neither a financial plan, goal or a promise any advisory practice can keep. There is no statistical evidence for the persistence of performance. Outperformance isn’t consistently achievable, and it especially cannot be

inferred from past performance. Investment returns is an area we have little control over.

Further studies show that the greater effect on a retirement plan, or any financial plan for that matter is your expenses. Expenses are an area in your financial life that can be controlled. Completing a budget will help you to determine what your essential and discretionary expenses are, you will then have greater certainty in relation to what you are planning for.

5. Not optimising your superannuation contribution strategy.

Superannuation remains the financial backbone of most individuals and the most tax effective vehicle when planning for retirement.  Unfortunately, Superannuation also remains one of the most complex areas in relation to your retirement plan. The complexity is due to the significant number of rule changes which have occurred in the last decade. As a result of this complexity, the benefits of a superannuation contribution strategy in the lead up to retirement is often underutilised.

Neglecting to implement a tailored superannuation contribution strategy is one of the most significant mistakes made when planning for retirement, the financial implications of this mistake often results in you not doing what you want, when you want with who you want..

6. Failing to have a plan.

The age old saying, if you fail to plan, you’re planning to fail. – Benjamin Franklin.

Having a well thought out retirement plan is paramount for securing financial stability and peace of mind in the later stages of life. It serves as a roadmap, guiding you towards your financial goals and aspirations for your retirement. It involves a strategic approach to saving, investing, and managing assets to build a sufficient nest egg that can support your ideal lifestyle through retirement. Having a comprehensive retirement plan allows you to make informed decisions, adapt to changing circumstances, and ultimately enjoy a well-deserved retirement with financial security and peace of mind.

Alternately, we can assist you immediately with understanding what retirement truly looks like for you and to answer the question of how much is enough and the most tailored way for you to reach it. Simply fill in the form below and our Personal Wealth team will be in touch.

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Photo by National Cancer Institute

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