Retirement is something that we all must face eventually. But surprisingly, only 30% of people are confident about their retirement and 61% admit that they are stressed about it.

We all know it is challenging to save up enough for retirement with the ever-increasing cost of living, which is why we need to be careful not to jeopardise it.

Making these mistakes before and during retirement, could delay saving enough, or cause irrevocable damage to your pension.

• Not having a proper income plan for life – Surprisingly, many people are worried that they will outlive their money but have no plan in place and are just winging it. They have no idea how much income they would need from year to year or for how long. Do your homework. You need to map out how far you pension pot will stretch when you retire eventually, what your potential monthly income would be, and how much more you need to save to sustain your ideal retirement lifestyle.
• Making the wrong investment return assumptions when calculating retirement income – You need to be realistic when projecting your income. Planning for an 8% return could lead to trouble. Your return assumption is based on the markets. They can perform well but can also under perform. It is recommended to go for the conservative rule of 4% annual withdrawal to ensure your money lasts. Rather be pleasantly surprised than have a shortage of money.
• Investment risk – When saving for retirement, we tend to go for higher risk investments for a chance to maximise our pension pot. Many forget that when you get closer to retirement, you need to look at protecting your savings and lowering your risk. Your financial adviser will monitor your portfolio and make adjustments accordingly so that you get maximum returns but still protect your investment against risk.
• Fear of retirement – These are the pensioners that are so fearful of not having enough money, that they live below their means and don’t do any of the things they wanted to e.g. visiting grandkids often, taking that dream vacation, partaking in your hobbies, socialising more. Suddenly 20 years later they realise they have done nothing and wasted their golden years. This doesn’t mean throw caution to the wind and do everything on your bucket list. It’s about balance. Your adviser will help plan your activities into your retirement budget. It’s good to have a separate pot set aside for these activities.
• Giving the kids too much – Unfortunately, this is a big sin committed by retirees. Of course, we want to help out our children, but it is doing no one good if you overextend your finances for the sake of your children and end up not being able to support yourself through retirement e.g. paying off their loans or helping with a mortgage deposit. Always ensure that you are covered first before gifting or loaning your children money. They need to learn financial independence. And who will take care of you if you can’t make ends meet? Your children are overextended and won’t be able to help you.
• Everything is going to be ok – Don’t blindly follow your financial adviser and leave everything up to them. They are the experts and advise on the best way to keep your money investment wisely, but you need to be actively involved in your finances. You need to be aware of how your money is growing, what your monthly income is, how the markets are performing, and if your money will be enough. It needs constant reviewing as financial markets fluctuate. They are the experts, but don’t be ignorant as you are trusting them with your hard-earned retirement savings. *

Ultimately you are responsible for our own retirement, but your financial adviser will be with you every step of the way. It is advisable to chat to them before making any decisions regarding your retirement income, so you don’t sabotage your own retirement. [email protected]

*https://www.kiplinger.com/

Please note, the above is for education purposes only and does not constitute advice. You should always contact your Acuma HK adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.