Retirement comes to us at some stage and just like death you can’t avoid it. With improved technology, most of us are likely to spend a quarter of our lives in semi or full retirement. Whilst this sounds good on the surface, the problem is you can’t live on fresh air alone, and the cost of living is increasing every year (particularly health care). To overcome this it is important that you take every free kick available and avoid the pitfalls.
Some of the more common pitfalls are,
1. Relying in factors outside of your control – despite media predictions to the contrary it is impossible to predict investment returns. Many retirees make the mistake of focusing on their investments ability to generate a certain percentage each year. Unfortunately markets don’t work like that and you have absolutely no control over your investment returns.
The Solution – you control your asset allocation, how much you save for retirement and how much you spend. Focus on these controllables.
2. Retiring too soon – the earlier you retire the more money you will need to live. The longer your investments are left to build generally (GFC excluded) the more money you will have.
The Solution – Carefully consider the appropriate date when to retire, an example may be early in the financial year to minimise your marginal tax rate on any lump sum employment entitlements you receive, at age pension age, or over 60 when the tax treatment on your superannuation monies changes.
3. Don’t forget your health – One of the biggest expenses you will find in retirements is healthcare. When setting your retirement income needs, don’t forget the cost of maintaining your health either self funded which I wouldn’t recommend or private health insurance. Without adequate planning one health issue can blow even the best laid retirement plans out of the water.
The Solution – Have an adequate level of private health insurance.
Failing to plan means planning to fail and if you have any questions in relation to your retirement plans please don’t hesitate the Main Street Team we can help – firstname.lastname@example.org