17 August 2021
The Five Worst Mistakes Retirees Make
2. Having too much money in property
It’s great to have a beautiful home to live in when you retire, but if you have no money in the bank or other investments you might find yourself living a miserable life. Try and have at least half the value of your home in other investments to avoid being asset rich and cash poor. This might mean selling your home at some point in retirement to free up funds, or taking out a reverse mortgage.
Downsizing your home doesn’t always leave you with cash in your hand, especially if you downsize to a newer, low maintenance home. You may need to move to a cheaper area to free up money. If you own investment properties, think about how and when you might want to use the money tied up in those properties, unless you plan to leave them to your children.
If only we knew how long we were going to live – it would make retirement planning so much easier! There are other uncertainties in retirement – such as how much money we will actually need to live on, and what investment returns will be. All this uncertainty means that people spend their money cautiously – too cautiously. Underspending can mean going without unnecessarily. Underspending can be avoided by taking a planned approach to running down capital. Start by assuming you will live a long time, then work out a pathway for planned spending. This can be reviewed annually as plans change and as retirement unfolds.
How do you maximise your income in retirement?
A Lifetime Retirement Income takes the stress out of managing your money in retirement, empowering you to spend and take on new adventures with confidence.