We all dream of living an idyllic lifestyle in retirement. For each of us, that will mean something different. But while lifestyle aspirations will differ, one common issue facing all of us is: Will I have enough money to fund my retirement?
The answer to that question will depend on the actions and decisions you take both prior to, and during, your retirement. So, to help you get it right, here are the common retirement mistakes and how to avoid them.
Not Having a Budget
Budgeting is an effective tool for keeping your finances in check. A budget shows you where you’re spending money, where you could cut back and where you can save. While cutting back on spending can be difficult, no matter how much you earn, budgeting is all about taking control of your money and managing cash flow.
Here’s a helpful tip. Learn to live within a fixed income budget while you’re still working. Consider cutting back on spending, and cutting up those credit cards altogether. Try living on 60% of your current income to determine what changes you’ll need to make to your spending habits in retirement.
Underestimating Years in R
You can’t successfully plan for retirement without knowing how long you need to plan for.
According to a recent article by MLC, How long will you live? if you are aged 65 today, there’s almost a 75% chance you’ll reach age 84, a 50% chance
During your retirement years, you may need to spend more on healthcare than originally anticipated, especially as you age. Similarly, government income support rules may change over time, which could leave you with less income than expected.
If you underestimate the years you’ll spend in retirement, it may be necessary to drastically restrict your lifestyle as you age and your retirement savings dwindle.
Not Diversifying Your Investment Portfolio
“Don’t put all your eggs in one basket.” Sage words of advice most of us have heard many times. It applies to many aspects of our lives … including investing.
Holding just a small number of investments exposes you to greater investment risk, especially during times of increased market volatility. Spreading your investments across asset classes such as cash, fixed interest, shares and property will generally produce more consistent investment returns over the longer term.
You should also diversify your investments in relation to timeframes for maturity. Setting short- and long-term goals helps ensure you have enough money throughout retirement.
Should you need expert retirement planning advice, contact us today.