Biggest Retirement Mistakes of 2024 Revealed…

Are you aware of the mistakes or gaps in your retirement plan?

If so, congrats, you’ve one of the lucky few…

For everyone else, if you are not fully aware of the mistakes or gaps in your retirement plan, you are literally throwing good dollars away.

Dollars which could be allocated to planning more experiences in your retirement years. Maybe even helping you to retire that little bit earlier so you have more time to do the things you want.

While I have clients I work with on an ongoing basis there are many if not hundreds of conversations I have throughout the year with people who download the book “Enough”.

It’s very clear people are struggling to figure this whole retirement thing out. Yes, there is a ton of information on the internet. But as one couple I spoke to recently said, “we’re tapped out, you go to one site, someone says something, then you go to another site and they say something different. We’re just lost”.

Retirement planning is a complex maze of decisions you need to navigate if you are going to get it right.

And you only get one chance at this…you know that right?

Unfortunately many people drift into retirement and regret not being in a better position.

And the main reason they are not in a better position is they didn’t plan. While many don’t start early enough, starting sooner rather than later will always position you well for retirement.

After all those conversations, here are the biggest mistakes I have seen in 2024…

Not having a framework

There’s a common issue among couples and individuals planning their retirement. While most have a good idea of what retirement looks like. They struggle to understand what decisions they need to be making. Struggling to put the whole retirement puzzle together.

More often than not, confused about what they should be doing and the information they should be taking notice of.

It leads them to the Ostrich effect, putting their head in the sand…

Which means, no decisions are made and life goes on until one day you’re staring retirement in face not knowing what to do. Wondering where time went…

It’s why we’ve built the “Retire Well Framework”. To help people think methodically through their retirement decisions with more clarity and confidence. It simplifies the retirement planning process backed by over two decades of expertise in the retirement planning space.

Not starting earlier enough

When should you start your retirement planning?

The simple answer is yesterday. There’s good reasoning for this. The earlier you start the better financially you’ll be positioned.

Not only that you’ll be better positioned for what life throws at you, whether that be an illness, job changes or simply changing your mind on when to retire.

We find many are jolted into action by a reality check. Whether that’s a close friend who may have passed away or simply you’re reached a certain age and thinking “shit, we don’t have a plan”.

If you are serious about making the best use of your retirement years you need to start now.

The longer you leave it, the less money you have for retirement and more importantly, you have less time to enjoy your golden years.

Not maximising super contributions

Many hurtle towards retirement doing the bare minimum, however, most don’t know how to maximise their opportunities.

This ranges from taking advantage of the personal super contributions limits. Using any unused contributions from the past year if your balance is under $500k.

For most, every dollar you put into super is a guaranteed 24% if you are on the 39% tax rate.

There are many rules to get your head around. This is why careful planning is required as you approach retirement to optimise all the opportunities you have. Otherwise, you’ll end up filling up the ATO’s pocket. Most are dead set against that…

A Blank Map…

We talk quite often about people drifting into retirement. And that’s because they have no map to follow, it’s a blank canvas with no directions.

You need to understand your own financial arrangements intimately and then determine what tactics and strategies you need to apply.

If you don’t have a map, you’ll struggle to make confident and informed decisions. A map helps you figure out how you are going to go from where you are, avoid the blind spots and guide you safely towards retirement.

Letting noise dictate their decisions

More often than not we see people succumb to the noise. One main factor is making a move with their investments thinking the bottom’s going to fall out of the market any minute.

Some listen to so-called experts sprouting the whole doom and gloom scenario. It’s been going on for hundreds of years. It’s nothing new, yet share markets around the world hit record highs.

Other’s listen to friends who think they know everything and think they are an expert.

Let’s be frank here, not even the experts know what’s going to happen to share markets. There is a huge range of factors which go into the daily movement of share markets. Getting the right call is nigh on impossible.

Besides which, even though retirement is approaching, your investment time frame is long term. You’ll be invested for another 20-30 years. Your strategy needs to reflect your long term cash flow needs.

This alone has cost people hundreds of thousands of dollars, and the cases are not isolated. I come across at least one person a week making this mistake.

Not only this, many make bad financial decisions due to their own biases. Making decisions without taking into account the whole context. Sometimes you need to take the emotion out of it and yes it’s not easy to do. 

This is where working with a professional who specialises in retirement planning can help you stay on the straight and narrow. The safe path and prevent you from heading down a dangerous path.

Misinformation

Yes, retirement planning is complex and very difficult to navigate alone.

Being misinformed may cost you your retirement…

I was only talking with a current client who had been involved in a recent conversation at work. A number of his work colleagues were considering using their unused super contributions to reduce their tax bills prior to retirement.

When I had this discussion with my client, he asked me how the rules worked. I explained to him, they would not be able to take advantage of these rules as their super balances were over $500k.

Imagine how they’d feel listening to misinformation only to find out years later through a letter from the ATO you breached the rules? I suspect not good, and could even lead to penalties depending on the rules breached.

Once again, this can be easily avoided by seeking advice from a professional.

Not converting super to pension at the right time

In a recent study, it was found over 700,000 Australians are paying more tax than they need to.

All for one reason, they have not converted their super to a tax-free pension when they are eligible. This is money people are handing to the government on a silver platter when they don’t need to.

Quite often this comes down to what you don’t know, the rules relating to super especially over the age of 60 and leaving an employment contract.

We’ve had a few clients in the last couple of years where they triggered the condition of release which meant they could convert their super to a tax-free pension. Where all earnings are taxed at a zero tax rate rather than a maximum rate of 15%.

Had they not converted to a tax-free pension they would have been paying significantly more tax than they should have.

This is a prime example of having an adviser by your side to help you with this stuff.

Taking on more risk when it isn’t necessary

We all love it when super funds are generating really good returns. However, what most people don’t understand is the risk they are taking to generate these returns.

In most cases it’s more than what most are comfortable with…

While taking on more risk is fine in your working years as you approach retirement, you have to consider carefully the risk you need to take versus what you are taking.

When we talk about risk, it’s the movement in your investments.

Let’s say you have one million in your super fund. If you are in a standard Balanced Fund, you could be exposed to up to 80% growth investments (share – local and overseas and property).

So when markets drop potentially your portfolio could fall 22% or fall to $780,000. In a more conservative portfolio it could drop to $840,000.

In retirement, when you are taking money out of your super, it can be compounded in times of market falls.

As retirement approaches, it is something you need to consider carefully, the risk you are taking inside your super fund.

Something many overlook and then regret not doing something in times of share market turmoil. You can take on less risk without sacrificing too much of your return.

You need to know what investment return you need to achieve to make you personal retirement plan work.

Retirement mindset

Many think they can keep doing what they’ve done for the last 30 or 40 years. This is a big mistake…

You’ll be moving from the accumulation phase to the decumulation phase, unless you have a truckload of money.

Retirement is a time when you start withdrawing from your super and other assets to fund your income. Instead of your regular employment income.

Thinking and doing things the same way leading up to retirement is a recipe for disaster and can lead to a poor retirement if you don’t get this right.

Just think about it for a minute…what have you been doing for the last 30-40 years?

One thing, accumulating assets to one day spend in retirement…you only know one thing and yet to experience the other side of the coin, retirement.

This cannot just be rolled under the carpet. Those who successfully retire with clarity and confidence know this, they’ve done the work.

How Much is Enough?

Probably the number one question we get asked is, “How much is Enough?”

While there are simple calculators online, they will only spit out a general answer. They are not specific enough to help you work out if you are on track or not for retirement.

There are many variables you need to consider, such as rate of return, inflation rate, spending rate, longevity, investment risk, age pension, whether using lifetime pensions or not and many more.

It’s a complex equation and unfortunately too many are flying blind when it comes to working out whether they will have enough.

The sooner you know this, the sooner you can determine what financial decisions you need to make.

One of the initial sessions we hold for new clients is a “Feasibility Session”. This is where we lay all the options out on the table, ultimately determining whether they will have enough money to fund the lifestyle they want.

It’s the first time most have been able to see their financial life laid out in front of them. Once you understand which path you are on, you’re able to make more informed decisions.

Such as how long you need to work, when will the mortgage be paid off, how much do you contribute to super and when you can retire comfortably.

The great thing about this is it’s the first time many have clarity about whether they are on track or not.

Some are able to bring their retirement date forward while others need to make trade offs to achieve their ideal retirement.

Just waiting for that number to fall out of the sky is killing your retirement opportunities.

Missed Opportunities

Knowledge is critical when it comes to your retirement planning. Unless you are a professional working day in day out in retirement planning it’s hard to know all the rules. Particularly the ones which will benefit your unique situation.

We’ve seen it all, from not ticking the right box on a form to claim a tax deduction for super contributions to paying more capital gains tax than they should due to a knowledge gap.

Life is busy and this means many just don’t have the time to filter through all the information and many end up confused.

This means no action which leads to missed opportunities.

That’s one of the benefits of working with a professional in retirement planning. They can help you filter out the noise so you can make the right decisions for your unique situation.

In most cases the fee you pay will be well and truly covered by any financial benefits you receive.

Avoid making BIG financial mistakes and get your retirement on track 

If you’re reading this, it’s likely you’re making one or more of these mistakes. Or you will without even knowing it in the future. Unless you are in the top 1% of the 1%.

I’m going to be frank here, we have not met anyone yet who is free from making costly financial mistakes. Nor free from potential mistakes in the future.

It comes down to one reason, they just don’t know retirement planning intimately, nor have they ever experienced it. So they struggle to work out what their own blind spots are.

Ever hear of the saying, “you don’t know what you don’t know”?

This is where most struggle, making sense of the mountain of information out there.

But it doesn’t have to be that way and you don’t have to do this alone.

We are here to make your retirement planning easy. To do all the heavy lifting for you. To work out what all your options are and the blind spots you need to protect yourself from.

If you are fed up of drowning in information, not sure which way to go. Then it’s time to book your Retirement Clarity Call by clicking here.

We’ll jump on a quick call initially to work out your gaps. If it makes sense we’ll book a more in-depth meeting to scope your retirement out.

Helping you get clear what it is you want out of retirement. Discuss how you are positioned today in relation to where you want to be. Then brainstorm your gaps or what potentially might get in the way of you achieving your ideal retirement lifestyle.

From there if it makes sense, we’ll take you through our proven framework for getting clients more clarity, confidence and control over their retirement decisions.

There’s no expectation on our end.

Stop drifting towards retirement today and take the first step by booking your Retirement Clarity Call by clicking here…

You deserve to retire on your terms…

Glenn Doherty – CFP – Financial Planner | Retirement Planning Specialist |Retirement Planning Made Simple for over 55’s within 7 years of retirement

We work with people in Adelaide and around Australia virtually via zoom!

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