Retirement should be a time of freedom and excitement. It's a time to do everything…
How do you want to live your retirement years? Settled, comfortable, happy—of course, you aim to have these dispositions during your retirement years, but if you want these things, you need to prepare for your retirement as early as now. However, Australia’s pension systems can get complicated, which is why many people make these common mistakes:
1. Retiring Too Early
Who doesn’t want to retire early, right? Many people do. Unfortunately, a lot of them make the common mistake of doing it too early that they overlook other benefits, such as the social benefits of work. In turn, these early retirees end up bored and could make plans to re-enter the workforce or take an extra risk to get a business up and running.
2. Making Conservative Investments
It’s common for retirees to dial down on the investment risk to allocate some more funds to their savings. Although there’s nothing wrong with this, cutting too far back on retirement growth assets may significantly affect savings. Next thing you know, you don’t have a lot left to see you through the rest of your years.
3. Overestimating Age Pension Expectations
Okay, you’re ready to retire now. However, you shouldn’t think that the government is also ready to give you a full age pension. For one, you need to reach the pension age that is between 65 and 67, depending on your birth date. In case you haven’t reached this age, you need to fund your lifestyle first.
Furthermore, you need to consider an income and assets test that applies to the combined assets and income of a couple. So, if you have significant assets or if your spouse is still working, you may only receive a little pension or none at all.
4. Failing to Do Estate Plan
Suppose you have not planned for your estate—no will, no death benefit nomination for your superannuation, and so on. In that case, you’ll leave a huge headache for anyone who will manage this should you become incapacitated or pass on. Don’t do this to your loved ones. Instead, speak to an attorney and discuss your estate.
5. Carrying Debt Into Retirement
Another common mistake retirees make is carrying debt into retirement. Some still have mortgages or cars to pay, while others still have considerable credit card interest payments to pay. Carrying debt into retirement can be a huge burden because you won’t have any income sources by then, which may deplete your savings.
That’s why it’s best to ensure your debts are paid before you retire. A possible option to eliminate debts is to consider downsizing your property and lifestyle.
6. Having Unnecessary Insurance
While planning your retirement, now is also the best time to review your insurance cover and determine what benefits are still relevant and budget for the premium payments. This is not to say you should cancel all of your life insurance cover upon retiring. It is best to review your cover with the assistance of your Financial Adviser.
Knowing these common mistakes will put you on a wiser path towards retirement. It only makes sense to want a smooth retirement process and make those years comfortable, convenient, and easy for you.
Start your retirement planning with our help. At Coastal Advice Port Macquarie, we guide you to enjoy your dream retirement through delivery of personalised financial advice. Book a complimentary meeting now.
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.