Four money mistakes people make in retirement

Making financial mistakes at any age is serious. But when you make those mistakes during your retirement years, they can be hard to recover from and may have devastating implications for your future lifestyle.

Those devastating implications may include being a financial burden on your kids, dramatically reducing your quality of life or even being forced to sell your home.

Thankfully, there are measures you can take to avoid spoiling your retirement.

The key is to avoid making these four bad money decisions.

1. Spending too much, too soon

It’s natural to want to live a little when you first retire. There’s that dream trip you always wanted to take, hobbies to learn, a home to renovate, grandkids to spoil … and the list goes on and on.

While there’s nothing wrong with having fun when you’re still active and healthy, remember your money needs to last the distance. And the more frequently you dip into your savings now, the more financially vulnerable you’ll be when you’re older.

2. Spending too little

While you don’t want to outlive your savings, going too far in the other direction can lead to an unnecessarily frugal lifestyle. You’ve worked hard all your life, so you deserve to enjoy the fruits of your labour. There’s no point living off baked beans and turning off the hot water in summer when there’s still plenty of your nest egg left.

That then begs the question: how do you find the right balance for your spending?

Working with a good financial planner can help keep your finances on track throughout your retirement. This can give you the confidence to have the retirement you’ve always planned, without the worry of overspending

3. Investing too conservatively

There’s a common view you should rebalance your portfolio and cut back on growth assets such as shares when you retire. For some retirees, this may be true. But for others, investing too conservatively can lead to problems in the future.

Remember, Australians are living longer than ever, so there’s a good chance you have a good innings left. And if you are too cautious with your investments, you might not keep pace with inflation – eroding the value of your nest egg over time.

4. Not having an estate plan

Imagine your children squabbling over your assets when you’re gone. A horrible thought, right? The thing is, there is an easy way of avoiding this nightmare. Work with a financial advisor to create a solid estate plan setting out your wishes before you die. This doesn’t just help prevent family disputes. It can also lessen the burden of sorting out your affairs for your family when you’re gone.