If you do not feel prepared for retirement, you are not alone. Many Australians feel that way, and, as a result, are more likely to make uninformed decisions that can have significant long-term consequences. It is, therefore, essential to gain knowledge about retirement finances from experts to maximise your retirement income. Along with knowing what to do, it’s also helpful to understand what to avoid doing.

Here are ten mistakes to avoid when retirement planning and what to do instead:

Mistake #1: Retire Too Soon

The average life expectancy in Australia is 83 years old, which means that if you retire in your ‘50s, you will need to have the funds to carry through the next 30 years. The easy fix here is to work longer, if possible, so that you accumulate more savings and have fewer years of withdrawals from the retirement fund. Furthermore, work brings many social benefits that many people forget to consider.

Mistake #2: Not Adding to Super

When you think about retirement, and it seems close, start to make additional contributions to super so that you have more savings to use later. Find out about spouse and government contributions to help boost your retirement fund even more.

Mistake #3: Anticipating a Bigger Age Pension

When you decide to retire, keep in mind that if you haven’t reached pension age that you will have to wait for the payments from the government. That means that you must determine how to fund monthly expenses until you reach your pension age. Also, keep in mind that too many assets or too much income (between you and your partner) will affect how much you receive as pension.

Mistake #4: Holding a Debt

If you have a debt going into retirement, that is a significant burden. It can be difficult to meet minimum payments when you’re not working anymore. Try to consolidate debt and pay off the smallest loans whenever possible, ideally before you retire.

Mistake #5: Not Budgeting

As per Paul Clitheroe, budgeting is the best way to get your finances under control and keep them that way. A budget explains where your money goes, where you can trim some fat, and where to save money. It will also make clear where your money is going so that you can determine how best to reduce debt or build your retirement savings.

Mistake #6: Investment Blunders

Perhaps you opted for a high-risk investment in the hopes of a big profit, and then it fell short, which put you in a bad place financially. A big mistake is not staying within your comfort zone when it comes to investments. A good financial coach will help you determine what investments could be smart ones for you.

Mistake #7: No Diversity in Your Portfolio

Putting all your eggs in one basket will be risky, explains Clitheroe. That’s true if something then happens to that one egg. So, instead, spread your money across a range of asset types, such as cash, property, and bonds. Doing so will help you get the most return over time to improve the size of your retirement fund.

Mistake #8: Not Starting Soon Enough

When it comes to planning for retirement, far too many people leave it until they are in their 50’s. If possible, start sooner than that to pay off your mortgage and credit card debts. There are many strategies to do so, which a money specialist can help you with, depending on your unique situation. For example, you might rearrange your pay so that your employer pays a certain amount of your salary in pre-tax dollars into your super.

Mistake #9: Using Tax Schemes

Tax schemes come in a range of shapes, sizes, and types, but one thing remains certain. If you want to invest, make sure that you understand the risks and smart strategies for doing so. Otherwise, stick to reducing your tax in ways you’re comfortable with, while having a common-sense approach to investing and paying what you owe regularly.

Mistake #10: Not Being in For the Long Haul

When investing to increase your retirement savings, a common mistake is panicking when there is a slight dip and withdrawing your money. That’s the worst time to do so as you can lose a lot financially. Instead, make it through the minor downturn and even invest more during this time, and you will be in a good position when the investment recovers.

Final Words on Successful Retirement Planning

The mistakes above can make your senior years more complicated, rather than peaceful. To help avoid these errors and others, seek the advice of a financial advisor to create a plan for retirement that you are comfortable with and meets your needs. Starting retirement planning is better done sooner rather than later.

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The information contained within this site has been provided as general information only and prepared without taking into account your financial position, objectives, and needs. You should consider its appropriateness and seek financial advice before making any financial decisions.