How to keep your finances on track once you leave the workforce by avoiding these money mistakes.
When you’ve worked hard all your life to build up your nest egg, the last thing you want to do is fritter it away too quickly. In this article, we look at the common money mistakes people in retirement make, and how you can do your best to avoid them.
1. Not taking control of your super
It’s important to know what your options are for getting access to your superannuation when you retire. You can take it as a lump sum, an allocated pension or an annuity. Learn more about accessing your super and then speak to your financial adviser to find out what’s right for you.
2. Not knowing your entitlements
Don’t make the mistake of not knowing what payments you’re eligible for in retirement. This may include government benefits, such as the Age Pension, carer’s allowance or disability support through to concessions on health and travel. Your financial adviser can help you understand how your entitlements will fit into your overall retirement plan.
3. Spending like you’re still working
Dipping into your savings or your super money regularly will soon whittle away your hard-earned savings. Find out about ways to manage your money in retirement to help you free up your cash flow and keep an eye on your expenses.
4. Not managing your investments
Just because you’re retired, doesn’t mean you should be complacent about your investments. It’s important to consider your personal situation. Many retiree’s enjoy learning more about investments as they have the time to do so. Speaking with your financial adviser can give you peace of mind that your investments are being managed in the best way for your situation.
5. Not managing your debts
Consider all your options for reducing your debts, as you may not have enough funds to last you through your retirement. Be careful about paying too much interest on your debts. If you need to pay off your home loan, make sure you’re aware of how selling your home or investment property affects your entitlements.
6. Spending your retirement savings on the kids
If you plan to give money to your children (or grandchildren) to help them out financially, be aware of how gifting or going guarantor might affect your tax and your lifestyle in retirement. Your financial adviser can help you understand the best way to transfer your wealth to your loved ones.
7. Letting your insurance lapse
It’s tempting to reduce your outgoings in retirement by cutting back on things like insurance. But before you do, consider that almost 62% of AMP insurance claims were made by people over age 50 in 2017.i Be sure to discuss any changes you plan to make on your insurance with your financial adviser.
8. Taking expensive holidays
Make sure your choice of destination fits within your overall budget, bearing in mind you need your money to last the distance in retirement.
9. Buying a new vehicle
When you retire it’s very tempting to use your super to buy a new car to last you through your retirement. If you’re serious about watching where your money goes, you might want to think about making your current vehicle last a bit longer, but you’ll need to weigh up the maintenance costs versus buying another one.
We can help you avoid making these money mistakes and plan wisely for retirement, so you can still enjoy the good things in life once you’ve stopped working. Give us a call today.
i AMP claims paid 2017.