Money mistakes people in retirement make

When you’ve worked hard all your life to build up your nest egg, the last thing you want to do is fritter it away over a few years. Here, we look at the common money traps people in retirement make, and how you can do your best to avoid them.

• Spending like you’re still working. Dipping into your savings or your super money regularly will soon whittle away your hard-earned savings. Find out about ways to manage your money in retirement to help you free up your cash flow and keep an eye on your expenses.

• Not knowing what your entitlements are. Don’t make the mistake of not knowing what payments you’re eligible for in retirement. This may include government benefits, such as the Age Pension, carer’s allowance or disability support through to concessions on health and travel.

• Accessing your super. It’s important to know what your options are for getting access to your super funds when you retire. You can take them as a lump sum, an allocated pension or an annuity. Learn more about accessing your super and then speak to a financial adviser to find out what’s right for you.

• Not managing your investments. Just because you’re retired, doesn’t mean you should be complacent about your investments. It’s important to consider your personal situation.

• Managing your debts (or not). Consider all of your options for reducing your debts, as you may not have enough funds to last you through your retirement. Be careful about paying too much interest on your debts. If you need to pay off your home loan, make sure you’re aware of how selling your home or investment property affects your entitlements.

• Spending your retirement savings on the kids. If you plan to give money to your children (or grandchildren) to help them out financially, be aware of how gifting or going guarantor might affect your tax and your lifestyle in retirement.

• Letting your insurance lapse. It’s tempting to reduce your outgoings in retirement by cutting back on things like insurance. But before you do consider that unexpected events can strike at any time, regardless of your age, health or lifestyle.

• Buying a new vehicle. When you retire it’s very tempting to use your super to buy a new car to last you through your retirement. If you’re serious about watching where your money goes, why not keep your existing one and sell your second car? Or make your current one last a bit longer, but you’ll need to weigh up the maintenance costs versus buying another one.

Your retirement is in your hands, so try to make the most of the money you’ve got and invest wisely to make it last. But don’t forget to also take care of your health to make sure you’ll be able to go the distance in retirement.

Source: AMP

^* AMP retail claims 2016.