Five retirement income mistakes that could ruin your future

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We all want a happy and stress-free retirement with enough income to pay the bills. A retirement plan is a good place to start, and avoiding these mistakes is essential.

1. Failing to consolidate
Many Australians work a number of different jobs throughout their careers, but some fail to keep all their superannuation savings in the one account. This can have a disastrous effect on your savings and your eventual retirement income. Not only do you risk losing track of some of your money, particularly if you have changed names or addresses, but you are also paying extra fees and charges on all your accounts. A better approach is to consolidate all funds into one superannuation account after speaking to an adviser to determine the best one for you. This will cut down on administration fees and ensure your balance grows strongly over time.

2. Not having an emergency fund
Any plan for retirement should include an emergency fund – money you can access immediately. What will you do if you have a health issue? What if your spouse or one of your kids has an emergency? Will you have money set aside to cover those costs? Most financial planners suggest having enough cash to cover at least three to six months’ worth of living expenses.

3. Not adjusting for inflation
We know prices are forever rising, but the rate at which they increase is anyone’s guess. Power prices have been a good example in recent years, but there will always be some expense that rises at a rate much faster than predicted. This can present significant challenges when trying to work out your cost of living year on year. When you are working, the rises in inflation are offset by potential pay increases, but you rarely have that luxury in retirement, with the indexation of the Age Pension offering little respite. Although year to year it may not seem as if prices increase all that much, over a 20 to 30-year retirement, the differences can be drastic.

4. Helping family members
Whether it is your children, your grandchildren or your parents, at some point in your golden years you will probably be called on to help in some financial sense. While you will be happy to help with some life events such as weddings, the birth of children, divorces or health issues, you don’t want to fall into the trap of constantly bailing out your kids or you will find your nest egg whittled away very quickly.

5. Worrying too much
Retirement shouldn’t be a time of worry and stress. It should be a time to relax and enjoy life after years of working. Some retirees have trouble remembering the reason that they worked so hard to save. They had an idea of the life they wanted in retirement, but they worry so much about running out of money that it can consume their retirement. A comprehensive retirement plan can help you transition from a saving mindset and help give you the confidence to spend on the things you always wanted in retirement.

Are you comfortable with your retirement plan? What would you do differently if you had your time again? What suggestions do you have for others based on your experience?

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Written by Ben


Total Comments: 5
  1. 0

    “Worrying too much” a Retirement Income mistake? Not a mistake with the Federal Govt’s (both major parties and the Greens) out to trash (increasing Age Pension age to 67, Changed Assets test from Jan 2017, more to come…) your hard-earned and properly planned retirement income plans. You HAVE to worry about it!

    And act – throw out all 3 major parties wherever you see their MPs / leeches sitting smugly in parliament without doing anything for you. Put them last in preferences. Such action may allow you to worry less in the future (maybe 2 elections are needed to flush these creeps out).

  2. 0

    GeorgeM makes a very solid point about regulatory risk. The major parties but especially the big spending, big taxing Labor+Greens alliance continue to prove is impossible to manage.

  3. 0

    Unfortunately, GeorgeM is right to be worried. It is clear that Centrelink is programmed to cut off instantly any benefits they can, and delay for years giving anything that might be owed to you.

    Us seniors are soft targets. I still see Labor as being preferable overall to the Libs, but the Greens have no clue at all about us and our needs. None of them will do us any favours: hurry up and die!!

  4. 0

    Well point 2 is a joke, right (whole article is pretty useless actually)?
    How can anyone put away an emergency fund when the bills in are equal to or greater than the incoming wage even tho you budget tightly year after year &/or you divorce a couple times & have to pay a property settlement or 2 along with the other realities of family life? And why do we need to help family who are also struggling to make ends meet (for similar reasons- wages are not increasing with the cost of living & young people are not even getting paid correctly/being ripped off by their employers- I have seen this soo many times with almost every young person I know around here!) I have been in my current job 17yrs & for the last 4 of 5 of those years there was ZERO wage increase & this has been common in many sectors of employment in this country in the last few years! How can people survive let alone put away ‘savings’ & emergency funds as suggested here based on that! PS: I do not smoke, drink alcohol, gamble (apart from a lotto ticket maybe once or twice per year), do not have health insurance (need the $ for other things like the odd music concert or weekend away once or twice per year)… things need to change! Saw some figures saying 35.5% Australians over 65 are in living in relative poverty compared to 2% in Netherlands & much higher than so many other western countries!

  5. 0

    I have been on a part age pension since early 2015. When the asset test changed in January 2017, I actually qualified for a full aged pension as the asset limit had been raised. I am sure there were many part pensioners who benefited from the asset change either receiving a full pension or an increase in their part pension. In Brisbane the Council give us a significant rate remission. Any reduction in pension renders a significant reduction or even complete loss of this benefit. The full rate concession for me is a saving of around $800 a year off my Council rates. In January 2017 my full Council rates remission was restored.



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