Personal Finance with Warren Ingram

Retirement: 8 biggest mistakes people typically make…

What are the biggest money mistakes retirees typically make?

That is the question The Money Show’s Bruce Whitfield asked Galileo Capital Financial Advisor Warren Ingram, regular guest of the weekly personal finance feature.

Not having a tax efficient retirement strategy.

Solution:

A combination of retirement funds (and other funds, e.g. unit trusts and living annuities).

Continue contributing to a retirement annuity.

Tax Free Savings Accounts

Tax rebates for interest

Being too conservative with investments.

Solution:

Your assets need to last for another 25 to 35 years. There is a huge risk of outliving your money if investments don’t grow by more than inflation. You must have adequate exposure to growth assets such as shares and property.

Failing to appreciate the power of personal spending decisions.

Solution:

You have little control over market returns (or what Zuma does).

However, you do have control over your spending habits.

Have a budget and stick to it (and redo it annually, or when your circumstances change).

Supporting adult children.

Solution:

Manage your support very carefully; you have limited time and capital available to correct your financial position.

You must have these discussions with your children, otherwise they might be looking after you once your capital has run out.

Being over invested in your house.

Solution:

Ensure that your home is not your biggest asset (unless it is an income generating one).

Not creating an estate plan.

Solution:

Ensure you will and all your beneficiaries on your investments is up to date.

Understand the various investment vehicles (e.g. living annuities go straight to the beneficiaries and don’t form part of your estate).

Spending too much early in retirement.

Solution:

Control your expenses.

Balance your desire for travel or leisure activities with the need to preserve capital over your lifetime.

Not being on the same page as your spouse.

Solution:

You need to have common goals and an understanding of your financial position so that there is agreement on how money is spent.

Ensure that either party can manage finances in the event of one spouse passing away.

For more detail; listen to the interview in the audio below.

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