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The 7 Biggest Retirement Planning Mistakes You Can Make

biggest retirement planning mistakes credithub australia

Retirement planning should never come as an afterthought. It’s not a simple case of paying off mortgages, acquiring a few shares, bonds and cash, and creating a safety net to get by. It is important to avoid certain retirement planning mistakes, if you want to live a comfortable life post retirement.

Research has identified that couples plan for more cash than the Age Pension provides, with a gap of around AU$11,000 between the amount designated (AU$30,000 per year) and what provisions make for (AU$19,000 per year). Those who want to live well during retirement need to be aware of their investment options and the risks involved.

But, what are the key errors that Aussies, approaching retirement, fall prey to? Read on to know more about the 7 biggest mistakes of retirement planning in Melbourne that you might make.

Mistake#1: Planning With Assumptions or Failing to Plan?

These are two common errors that many Australians, approaching retirement age, have a susceptibility to. A solid comprehension of the assets, amount of money needed at the time of retirement, and the duration for which the money will last, is important. Hence, checking to see if the numbers add up is important.

Closely studying the annual rate of return and comparing it against the Consumer Price Index (CPI) and inflation rate can make a difference. If you fail to plan, you will plan to fail when it comes to investment. An ANZ Survey of Adult Financial Literacy in Australia found that only 37% worked out the amount needed to save for retirement.

Your money will not magically appear in your bank account on the day of retirement without any planning. So, think about this carefully because financial planning in Melbourne is a must. A lack of planning means failure to consider factors like the taxation position, cash flow, budget, retirement, and real estate planning issues.

Mistake#2 Failure to Budget For Retirement

Again, budgeting is an effective tool to keep your finances under control. Budget keeps you informed about where your money is going, how you can cut back the expenses, and where to make savings. Cutting back on spending can be tough without having a budget in place to control the money and manage the cash flow. A budget creates a better understanding of where money is going and also to pay off debts like credit card dues, mortgage, or more.

Mistake#3: Leaving Money In the Bank

If you thought that leaving money in the bank will make it grow then you are making a mistake. This is another error people make in retirement planning. The bank is a right place for everyday spending money, but no good for investment cash. Don’t leave money to earn interest in the bank, this may even yield negative returns when inflation is higher than interest rates. Shares present more risk than cash. However, shares and property initiate capital growth over a long time period.

Mistake #4: Failure to Stick To The Course

Successful investing has many obstacles associated with it. This is known to share market investors. Successful investors should be able to take setbacks in their stride and not panic at the first sign of trouble, Retirement planning is all about making room for contingencies. Charting historical performance is critical to success. Don’t make the error of choosing the fast lane, get rich quick schemes. Opt for slow and steady growth. Focus on the potential of your investments in the future. Miscalculating the risk you are comfortable with is another problem that can create an obstacle in the face of retirement planning.

Mistake #5: Timing the Markets is Important

In the markets, timing is everything. Those who pick shares on the upswing can expect to retire comfortably. But picking the winning choice is not always easy. Trying to beat the markets can create a real problem. So can putting all your eggs in one basket. Consider share market, property market and technology shares crashes before you decide to concentrate on only one asset class.Spreading the money across different asset classes like fixed interest, cash, shares and property ensure consistency over time.

Mistake #6: Not Conducting Enough Research

During tech bubbles or share market crashes, retirement planners often get swayed by opinions. Most act on advice without doing research. Always study financing and investment. Study and research the markets to see if the investment actually works out to look as good as it was. Tax schemes are another temptation people fall into. Tax schemes try to cash in on your desire for lucre. But, there are no shortcuts to success. Instead, you need to concentrate on tax minimisation in the usual ways.

Mistake #7 Left Planning Too Late or Retiring Too Early?

Starting off late with your retirement planning in Melbourne is one of the most common and deadly mistakes you can make. Starting early and saving amounts for later days can serve to ensure financial independence in your twilight years. You need to increase repayments and clear your mortgage before you retire.

Invest money in super funds to get balanced capital, stable growth funding options. Another mistake to make is retiring too quickly. Working just a few days in the week can be a better way to transition to retirement.  While planning for future retirement, you need to focus on wealth creation and maximise your savings. You can maximise your investment by making salary sacrifice for your Superannuation fund. “If you make super contributions through a salary sacrifice agreement, these contributions are taxed in the super fund at a maximum rate of 15%. Generally, this tax rate is less than your marginal tax rate.” (ATO, June 2017)


To ensure a smooth retirement, it is critical to consider these mistakes before engaging in retirement planning. A retirement plan can make a massive difference to the ease of living during your later years. Greater investment complexity makes it easier for people to make mistakes for retirement savings. Planning ahead can save you from pitfalls and mistakes.

CreditHub Australia’s Financial Planning Services enables you to make smart decisions when it comes to areas such as investing, retirement planning, and self-managed superannuation funds. Creating a financial plan will help you get along with the future financial crisis and will equip you to make better financial decisions. Financial planning with the help of professional financial planner can help you achieve your goals.