Mistakes To Avoid Making When Saving For Retirement
Planning for your retirement is a lifelong project and many mistakes that are often made can be avoided whilst you are young thus making it for more possible for you to live a more comfortable retirement.
Saving for retirement can be full of challenges, here is a list of things to avoid doing to ensure that you are able to prepare yourself for when you decide to retire.
Not Having A Plan
The old saying “if you fail to plan, you have planned to fail” is very relevant when it comes to saving for your retirement.
As our life expectancy increases this means your retirement could make up a larger portion of your lifespan than expected. It is therefore important to ask yourself what type of lifestyle you would like to live when you retire? By doing this you can begin to set some goals for your long-term wealth creation plan.
Australia doesn’t have an official retirement age, however there are some factors to consider when determining what age, you might stop working. You might retire when you’re eligible for receive the Age Pension, or when you reach your Preservation Age which is the age when you can access your super.
Your retirement age could also be influenced by a number of other factors such as; your profession, health, family circumstances, or individual preference. Retirement could potentially span a period of 30 years or more, so the possibility that some Australians will outlive our savings is not at all unrealistic. The most important thing to remember is, the earlier you retire, the longer you’ll be relying on your savings and super, and the more you will need to have saved to support yourself.
Dangerous and Speculative Investing
Your retirement account isn't a place to gamble with your money. Engaging in day trading with the hopes of making a quick profit or buying high-risk investments with the goal of big gains are generally not the best approaches to investing your retirement funds. By doing this you stand too great a risk of losing more than you can afford and ending up with insufficient money to support yourself.
Rather than taking a chance on your future, it is much wiser to build a diversified portfolio of well-researched investments that your can hold for decades. This will help greatly increase the chances of you ending up with the money you need to live a fulfilling retirement.
Paying High Fees
Investment fees always decrease the real returns you earn; and this can have an outsized impact when you're investing for retirement since you'll have your money in the market for so long. Avoid investments that cost a lot and instead stick to low-fee options such as exchange-traded funds (ETFs) or stocks purchased through commission-free brokerage firms.
By avoiding fees, investing wisely, and leaving your nest egg alone to grow, you should be able to maximize the chances of building the nest egg you deserve.
Not Looking After Your Debts
It is important to ask yourself if you will be entering retirement debt-free? The Australian Securities and Investments Commission (ASIC) undertook research into credit card lending. After reviewing 21.4 million credit card accounts, they found 18.5 per cent of people struggle with credit card debt. You do not have to be a part of this statistic if you take control of your credit card debt.
