Sometimes retirement plans do not work out as planned, leading to a lost opportunity to make the most of your next 30 to 50 years of life.
Often, the reason that retirement plans don’t work as expected is a failure to understand what shaped your beliefs and philosophy around money and retirement that is your “retirement mindset”.
Whilst a retirement plan may be technically correct if it does not adequately address your reaction to different situations that you will face in your transition to retirement and retirement itself, your retirement plan can quickly be undone.
“It is a retirement planning mistake to not acknowledge how your past and history has influenced your retirement mindset”
Understanding your retirement mindset around the following 8 key areas will help you to avoid retirement planning mistakes:
You may be risk-averse and have never borrowed to invest. On the other hand, you may be inclined to jump in at the deep end without completely being aware of the consequences and risks of debt in your retirement plan.
There are several ways to accumulate wealth and often the approach we take is influenced by our history, beliefs and experiences. With an understanding of why you react in certain ways, you are able to find a pathway to plan for a financially secure retirement. Without this understanding you could be prone to overconfidence or even under confidence, to save for your retirement.
At times you may need additional insurance to protect your income or to make sure that your family’s future is secure. How much you insurance you believe you need will be influenced by your beliefs and experiences with life’s ups and downs.
The options for retirement are changing rapidly and your view on retirement will be shaped by many factors. Having an understanding that there are many ways to “retire” and having a plan to work through the various options and your own circumstances and possibilities will help you have an inspired retirement.
If being able to give not only money but your time is a core value and belief that you have, your retirement plan should be tailored accordingly. For example, you may prefer to donate money to charities and sacrifice an item on your “bucket list” or work less to be able to give of your time to worthwhile pursuits.
Some of us are good at spending and others are spendthrifts. Having an awareness of where you fit, will assist you in preparing a retirement plan that provides you with the guideposts to follow giving you the freedom to spend or a save.
- Stock Market
Your level of knowledge and experience with investing may be different from that of your partner. Having an understanding of what you (and your partner) are comfortable with and how you can sleep at night with the investments you have will help you prepare a retirement investment plan that will help you to achieve your retirement planning goals.
Everyone will have different thoughts on how much you might spend on your children. For example, you might have attended a private school and it is important to you that your children/grandchildren be given the same opportunity. The level of spending on your children needs to be considered in light of your retirement planning goals and adjusted accordingly.
To have a long and happy retirement, having an understanding of you and your partner’s retirement mindset can help you plan your retirement so that it is achievable under many different circumstances and scenarios.
For further tips on how to prepare for retirement, download the attached ebook “How to live an Inspired Retirement” or listen to the “Real Life Financial Planner”, Geoff Ivanac on our retirement podcast, “Real Life Retirement Radio”.
General Advice Warning: Any advice on this site is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making any decisions.