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5 Common Retirement Planning Mistakes You Should Avoid

5 Common Retirement Mistakes You Should Avoid

By planning and saving for retirement, most people can look forward to a rewarding life in their post-working years. However, it’s not as easy as it seems and many Australians fall short of their goals simply because they didn’t save enough. If you want to avoid that from happening, here are some common retirement planning mistakes that retirees should avoid.

Retirement Planning Mistakes to Avoid

1. Waiting Too Long to Start

Retirement planning should begin as early as possible. The longer you wait, the more expensive it gets. It is possible for those who are already in their late 30s to start a retirement plan and continue to maintain it regularly to benefit from its growth.

A 25-year-old saving $1,000 per year in an investment account is projected to have a balance of $120,8001 by the time they turn 65 years old. This is quite impressive given that they only deposited $40,000 of their own funds. *

* Assuming an effective interest rate of 5.00%.

2. Not Adding to Super

The superannuation system allows you to contribute additional contributions to your super account while working. So if your cash flow allows, consider making regular contributions to your super fund as part of your retirement planning. Do not let this opportunity pass you by – the superannuation system is one of the few tax-advantaged retirement strategies available to most Australians.

It’s important to know that there are limits to the amount of super you can contribute as well as regulations around contributing. You may like to discuss with a financial planner what the best options are for you to prepare your super for retirement.

Here are some of the super contributions you can make:

  • Pre-tax super contributions (salary sacrifice)
  • After-tax super contributions
  • Government co-contributions
  • Spouse contributions
  • Downsizing Contributions

3. Saving in the Wrong Account

People do not make meaningful savings because they put their money into the wrong account. The biggest mistake is assuming that their savings account is the best way to save. But with a savings account, your money is unlikely to grow at an appreciable rate and may be outstripped by inflation.

So if you want to achieve substantial returns for your retirement, you should investigate investing at least part of your savings into a diversified investment portfolio. Why invest in a portfolio? Investment portfolios give you a greater opportunity to earn a higher return on your money. You can select investments that are suitable for your risk appetite.

4. Forgetting About Taxes

In Australia, there is no tax deduction for investing in a personal investment portfolio. You cannot deduct your investment expenses from your taxable income unless you have geared portfolio i.e. borrow to invest.

To invest your own money in a tax-effective environment, you should consider turning to your superannuation account. A superannuation fund is the most common tax-effective investment account. Earnings on investments within your super fund are taxed at 15%. This includes interest and dividends, less any tax deductions or credits.

5. Taking on Too Much Investment Risk

People who cannot save enough for their retirement tend to take on more investment risks. This is because they are desperate to get more money to reach their retirement planning goals sooner. But this is not advisable. Not only can you lose money, but you also incur more losses. So it’s better to be patient and let your money grow.

People who are well-off financially can afford to invest in even riskier assets that are more likely to grow. But this is not true for everybody. So if you do not have a significant amount of money to invest, then it is best to invest in low-risk investments that are more likely to yield a regular income.

Prepare for Your Dream Retirement!

Retirement planning is an extremely important concept in Australia. But many of us don’t put enough effort into it because we think we have enough time to deal with it later. But the reality is that our lives are much shorter than we think, and we should not rely on our future lives to make up for our present negligence.

Planning for your retirement may seem daunting, but it does not have to be. With the help of a professional financial adviser, you can easily ensure that you have enough savings for your retirement. That’s why Newcastle Financial Planning Group is here. We make it our mission to help you achieve financial success and security. Whenever you are ready to start your wealth creation journey, we are here to help. Call us or book online today to secure your first meeting.



  1. https://moneysmart.gov.au/budgeting/compound-interest-calculator


DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
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