Two mistakes to avoid before you retire

07 Feb 2013

By Belinda Von Knoll

How far off is your retirement? If you have five, ten or even better 20 years to go, you can avoid the first mistake – which is not planning early enough.

There's a great old saying which goes like this – "The best time to plant a tree is 20 years ago, the second best time is today." Retirement planning is very much in the same category. By the time you reach retirement you should be reaping the reward of careful planning undertaken over a period of many years. Like everything in life, many small steps over time add up to achieving your goals. As an example, saving just $100 a month in a bank account earning 5% from age 20 will result in a payout of $201,000 at age 65. The earlier you seek financial advice the smoother the transition into retirement will be for you.

By having a plan for your retirement you can gradually accumulate a nest egg with your monies in the right structures to maximise your income. You can ensure assets are sold in the right years to minimise tax. You can make sure you protect what you are building by having insurances in place when you are younger. A sensible insurance package can significantly improve your chances of achieving your goals if something goes wrong along the way. On the savings side of the equation, you can invest in a way which helps you meet your retirement income goals whilst also ensuring you sleep well at night.

In retirement you want to be able to do all the things you dreamed of doing - not just survive. This rarely happens by accident, it takes thought and planning.

The second mistake to avoid is going into retirement with no hobbies or interests. Now I can hear you say - what are you talking about, I have plenty of things I can do! But just sit back and think about it for a while to make sure you are right.

The most common problem I see in my retired clients is boredom. Frequently in our working lives we are so caught up in our jobs and the rest of our time tends to just be taken up with the family, chores and rest. Suddenly when there is no job to occupy us, the family have grown up and left home and the chores are all sorted before the morning is over, what do you do for the rest of the day? Some of us read, some play golf or tennis and this is a great start but most of us cannot do it seven days a week.

My recommendation is, if possible, to gradually wind down your work hours and start taking up new interests to complement your current ones. Gradually you will get to the stage where there is no time for work and then it is time to retire fully! If you still have time on your hands look into volunteering. Most charities, hospitals and aged care facilities are crying out for help and the experience can be extremely rewarding.

So why not plan early and retire happy?

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