Apr 01, 2020

Our Insights

Retirement can be a daunting process at the best of times, let alone when there's uncertainty and fear arising from a global pandemic and a volatile market. 

Even when surrounded by extreme circumstances, you can regain your confidence and feel secure when you avoid key mistakes. 

In the lead up to retirement

Failing to plan for your financial future

The best time to plan for your retirement is right now, no matter who you are, how old you are or the circumstances you're facing. Without a plan, especially in the midst of a global crisis, you're flying blind and there's a much bigger chance it will cost you financially and emotionally.

An effective retirement plan should address:

• Investment advice and risk assessment
• Specific deadlines for reaching specific financial goals
• When you plan on retiring
• Insurance
• Taxation position
• Budget
• 'Rainy day' emergencies
• Estate-planning

Make sure there's flexbility. In volatile times things change quickly, and you may need to adapt - not just for the risks, but also the opportunities that may arise.

Having your head in the sand

Putting off retirement planning, and avoiding the hard conversations about how the current market climate could impact your future, is a problem.

These things aren't always comfortable to talk about, but they're important. Not addressing this now will create greater challenges for you down the track.

Another factor is that many people will assume they’ll be able to work into old age and have plenty of time to save their money. However, as we've learned, anything can happen, and you could be forced out of work or to retire early for a number of reasons. 

Not factoring in healthcare costs

Healthcare costs can be a major expense which are forgotten about or not accounted for in retirement planning. If you haven’t factored in these potential costs and you are later required to pay a high price for a healthcare issue, your savings will take a big hit. Plus, it will bring unnecessary stress upon you, which could be even more detrimental to your health. 

Investing in fear

If you don't have an investment plan, you'll give into fear when the market goes wobbly. Instead of playing the long game, you'll react and make decisions that cost you big time in retirement. 

You'll also make other poor investment decisions, including a lack of diversification, chasing trends and panicking. 

In retirement

Not doing your research

There are many retirees who miss out on potential financial opportunities because they don’t do their research or get expert advice to find out their entitlements. You could be eligible for several entitlements, including allowances, support and concessions and not aware of it. This is especially the case during a crisis where the government is introducing new packages and support schemes regularly. 

Blowing the budget (or not having a budget!)

Not having a budget, or not sticking to your budget, will quickly lead to overspending and quickly drain your funds. It is estimated that retirees regularly spend between $50 to $300 beyond their budget each month, which is often due to retirees unable to break the habit of spending as if they are still working.

In a time of crisis, it is nearly impossible to adapt if you're not managing a budget and understanding how you're spending your money. With a budget, you can quickly make adjustments to suit your evolving circumstances.

Not managing your finances 

A lack of overall finance management can be detrimental to your retirement during a time of global uncertainty. Issues such as debt and poor cash flow can quickly creep up and put you in a risky position.

You also need to ensure you take control of your super and understand your options for gaining access (such as lump sum, allocated pension or annuity). Determine the best and safest access option for you and which will ensure your savings are most effectively spent.

Get Advice

Don’t fall victim to these common retirement mistakes during volatile times. With the help of our expert team, you can feel confident in the steps to achieve your retirement plan even in crazy times.

Talk to the team at Calder Wealth Management. Call us on (08) 8373 3333 to schedule your free initial appointment. 

Written by Ben Calder at Calder Wealth Management.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own  circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.