Keep your finances on track once you leave the workforce

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.

1. 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. Speak to us to find out what’s right for you.

2. 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, travel and pension loans.

3. Spending like you’re still working. Dipping into your savings or your super money regularly will soon whittle away your hard-earned savings. Ask us for help you free up your cash flow and keep an eye on your expenses.

4. 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. If you have investments to make sure you continue to receive appropriate financial advice.

5. 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 are in pre-retirement you should talk to us to obtain advice on how to consolidate them and pay less interest. 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.

6. 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.

7. 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 72% of AMP life insurance claims were made by people over age 50 in 20151.

8. Taking expensive holidays. If you love going overseas it will come at a high price. Consider some cheaper options like soak up our own beautiful countryside in a car or caravan.

9. 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.