You’re likely to live past 100, and here are 5 retirement mistakes to avoid

Underestimating years in retirement

Australians are living longer. Figures released by the Australian Bureau of Statistics show 4,440 Australians turned 100-years old between June 2014-15 – that’s an increase of 550 centenarians on the previous year. Women were four times more likely to reach the milestone than men which reflects the higher life expectancy for women. This means a longer retirement, which could have a significant impact on expenditure.

Living life large

When planning for retirement, one important question to ask yourself is: “How much income do I need to maintain my current lifestyle in retirement – or am I willing to adjust my lifestyle?” For most people, the answer is generally I don’t know, or they’ve made an inaccurate assumption of their income needs.

Rather than a linear budget, where your expenses remain the same year after year, it may be worth considering a ‘U-shaped’ budget in your retirement. This is where your spending over the period of your retirement resembles a ‘U’, with the highest expenses in the first years of retirement and your later retirement years.

When you first retire, your spending will most likely be higher as you take that trip of a lifetime, splash out on that caravan or boat, or pay off your home loan (or all of the above) and engage in an active, and possibly more expensive, social life.

Your spending is then likely to settle into a more regular pattern in mid-retirement, before increasing again in your later years when greater healthcare costs and aged care expenses come into the mix.

Leave your money in the bank

Bank may be a terrific place for your everyday spending money but it’s no good for your investment money. Shares and property generate capital growth over the longer term and returns may be taxed favourably. Spreading your money across asset classes like cash, fixed interest, shares and property can produce more consistent returns over time. However, make sure you have enough funds on hand to cover everyday expenses and unexpected emergencies as restrictions, penalties and/or delays may apply when withdrawing funds from some fixed or long-term investments under certain circumstances.

Not doing research

Research everything; From your next holiday destinations to the types of investments you prefer, to the cost of healthcare you need after you retire. Undertaking a period of research also gives you time to really make decisions that will suit you now and in the future. Some things that initially look good, might in fact not be appropriate on closer inspection.

Underestimating health care cost

Australia spent $180.7 billion on health in 2016–17 – more than $7,400 per person. Although most treatment in Victoria’s public hospitals is free for all Australian citizens and most permanent residents, it is important that you know about any extra hospital fees that you may have to pay. If you are unsure about your fees, ask your doctor and the other hospital staff, or contact your private health insurance company and Medicare to find out.

Other helpful resources:

Guide to retirement financial planning
5 biggest retirement planning mistakes to avoid


The information on this website and the links provided are for general information only and should not be taken as constituting professional advice from the website owner nor the article author from Serenity Circle. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. Serenity Circle is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.

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