Common retirement mistakes and how to avoid them

So you’ve done all that you were supposed to do.

Your superannuation is looking healthy, you’ve got a nice little nest egg, the kids are off your hands and you have a bunch of fun stuff lined up for your retirement, maybe even some travel. You even think about getting a dog.

All this is good, but there are common retirement mistakes that can take the shine off your golden years. Here is a few to watch out for.

Not having a financial plan

Getting access to your super is both exciting and tempting. For some people it will be the largest sum of money they have ever had, and the potential to do a deep dive into all that cash can be overwhelming.

Well, before you retire, it’s a good idea to start planning what sort of retirement you would like. Do you want to stay where you are? Have you thought about downsizing or moving to the country? Is travel important, what’s your health like, will it be important to be near to health services? What sort of lifestyle do you want to lead? Do you have enough for any surprise financial bumps in the road?

Read: How to spend in retirement and make your money last

Start with these basic questions and work out a plan to pay for them. This could be the framework for the rest of your life.

But don’t be afraid to change the plan. New government legislation, a sudden health crisis or even just a dream holiday may be enough to radically alter your expectations.

Not updating all your documents

Now you hopefully have a bit of time on your hands, it’s time to update all your important documentation and maybe even consolidate it all in one place.

Wills, passports, deeds, investment documentation, bank account information should all be updated, copies made, and kept in safe place. A safety deposit box may even be a good option.

And while you are updating a will, it’s a good idea to also appoint a power of attorney and power of medical attorney, and set up an advanced care directive. These should give not only yourself some peace of mind, but also your family.

Giving away too much money

It’s natural to want to help family members out, but don’t put yourself into a position where it becomes a burden or seriously affects your budgeting. If you are fielding persistent requests, draw some firm boundaries now to save yourself time and potential angst later.

If you are drawing the Age Pension, there are clear limits on how much you can give before it will start affecting your payments. According to Services Australia you can give away $10,000 in a single financial year with a maximum of $30,000 over a rolling period of five financial years. The same amounts apply if you’re a single person or a couple. If you give away any more money, Centrelink will count the excess in your assets test and apply deeming and include it in your income test.

Read: Ten things I learnt in my faux retirement

Failure to budget

Whether you receive the Age Pension or superannuation, you should budget your income. Some costs will go down now you are retired, you no longer have to commute or maintain a work wardrobe, but some costs will go up, including healthcare and possibly help around the house or yard, depending on your ability.

Sit down and set a budget. There are plenty of free planners online or get some professional help if it seems overwhelming.

Once again, it doesn’t have to be set in stone, regular adjustments may be required as you move through different stages of your life.

Not knowing your entitlements

You may not qualify for the full Age Pension, but you may qualify for a part pension or other payments such as a carer’s allowance or disability support, concession cards or other government entitlements including disaster payments.

Visit servicesaustralia.com.au for all your entitlements, you might be surprised at what you are entitled to.

Read: Going it alone in retirement: an expert guide

Staying static

Retiring from work should not mean retiring from life, move it or lose it.

It’s important to fill at least some of these free hours with activity. Start looking around for something that interests you.

There are plenty of activities for older people, whether it’s a men’s shed, volunteering, walking group, U3A, travel or just a catch-up for coffee with friends.

If you don’t feel like exercising in public, check out YouTube. There are exercise videos at all levels from challenging to chair aerobics.

Stay in touch

It’s all too easy to disengage with society once you retire from formal employment. Many people’s lives are tightly bound in their work identity and removing yourself from that situation can cause a massive social vacuum.

Make sure you continue with human interaction. Pandemic lockdowns have shown that continual social isolation often has a severely negative impact on mental health.

If you are looking to find some new friends or bond over an activity you enjoy, a good place to start is your local library or search on meetup.com for a subject that might interest you.

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Written by Jan Fisher

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