We want to make sure we will be covered financially. What can we do to ensure we will have enough to live comfortably?
A: When entering retirement, you are shifting to measured spending and you need to have a clear game plan in mind on how you will manage your money and stretch it till the end.
Read the latest Property360 digital magazine here
These are six common mistakes retirees make:
Overspending: Many retirees start by pursuing all the things they didn’t get to do while working, such as travelling, picking up a new hobby or renovating their homes. They underestimate the amount of money they’ll spend in those first few years of retirement.
Withdrawing large sums from pension: This can put your portfolio in jeopardy of running dry. If you withdraw large amounts of money frequently, you may suddenly need to make major changes in your lifestyle and spending just to get by.
High-risk investments: Retirees need to consider their risk profile when looking at suitable investments post-retirement. Unfortunately, time is limited to make up capital losses, should they occur in high-risk investments.
Falling prey to scams: Retirees are among the most targeted for scams. Fraudsters are always on the prowl, looking for ways to scam retirees of their pension payout and contributions.
Cashing out pensions too soon: South Africans can retire from as early as 55. However, the biggest drawback to an early pension is that it will reduce the amount of money you receive each month.
Misconception about paying tax: Most forms of retirement income are taxable. Many retirees are of the impression that their money does not get taxed when they retire leading them to withdraw large sums of money frequently. – Himal Parbhoo, FNB chief executive of Cash Investments