Budgeting

3 Money Mistakes That’ll Make Your Retirement a Living Hell

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Jeff Cuellar

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Retirement is a HUGE topic right now. Mostly because Singaporeans are finally figuring out that the social safety net known as the Central Provident Fund (CPF) isn’t going to provide enough for many of them to retire comfortably on.

Sadly, many Singaporeans are facing an uncertain retirement future. Mostly because they’re failing to become more proactive with retirement (especially in generating more retirement savings), or they believe many dangerous retirement myths that end up ruining their golden years.

Even if you manage to join that lucky group of Singaporeans who have built up comfortable nest eggs, you shouldn’t celebrate too early – because it only takes one financial mistake to turn your retirement dream into a nightmare.

Here are 3 money mistakes that’ll make your retirement a living hell:

 

#1 Wasting Your Well-Earned Retirement Savings on a Big Purchase

You did it. You finally beat the ridiculous cost of living, the inflation rate, and time in your quest to build up a fantastic retirement nest egg.

OK, so now what?

If you’re scratching your head because you don’t know the answer to that question, that’s a troubling situation. Because it shows that you haven’t really planned “how” to budget and use your retirement savings.

That’s dangerous, because it can lead you to celebrate retirement the wrong way – with a big purchase. I know it’s cool to drive around in fancy sports car, have a boat at the Marina at Keppel Bay, or have a property in some exotic destination But before you buy – PLAN!!!

You should plan how you’ll make your retirement funds last and create a retirement budget that lasts. And you should track every expense to make sure your retirement budget is on track to maintain your comfortable lifestyle for the long run.

The last thing you want to do is spend a sizeable amount of your retirement funds on something that turns out to be more of a money-draining liability than an asset.

 

#2 Giving Too Much Financial Help to Your Children

Unless you plan on being about as unloving and cold to your children as almost every father on Game of Thrones (well, with the exception of Craster, but that was a case of being a little too loving), you’re probably going to help your children out financially if they need it right?

Listen, I know you’re probably a great parent, and you want to help your children with any problem they come to you with. But when it comes to helping them get out of debt, you should resist the urge to open your wallet and give your kids a blank check on whatever they need to fix their financial problem(s).

Yes, it’s incredibly easy for people to rack up huge amounts of debt from education, car, housing loans and credit cards. But paying off your children’s debts can seriously hurt your retirement savings.

I’m not saying you shouldn’t give them any financial help. You certainly can. But don’t give them a blank check to cover their debt. Instead, work with your children and teach them the following:

Unless you really expect your children to pay you back in full (in this lifetime) for any debts you pay off, you should really just work on helping your children fix the problems that got them in debt in the first place.

 

#3 Being Way Too Conservative on Your Investments

This is something a lot of people forget to consider when they retire. It’s no secret that the closer investors get to retirement, the more conservative they become with their investments.

After all, who can blame you for wanting returns that are more stable and less risky when you’re only a few years away from exchanging your business suit for a batik shirt and Bermuda shorts?

Well, once you’ve driven past retirement age, the investments that helped you get there tend to stay on the conservative side.

The question is WHY?

If you’re probably going to live another 15-20 years (the average life expectancy in Singapore is 82.14 years currently), why not take a little more risk with at least a portion of your investments? That way, you can still grow your money without creating unnecessary risk to your portfolio.

No, that doesnt’ mean you need to must allocate your ALL of your portfolio into Bitcoins, but having some higher-return investments will give you the financial breathing room to make your portfolio last.

For some more helpful information on investing, be sure to check out our Learning Center  section on Investing.

 

Final Note: Hopefully during your retirement planning, you didn’t forget to evaluate estate planning (*cough* your last will and testament). If you have yet to create a will that will cover the division of your estate, you definitely should read our article “Get Financial Peace of Mind with This One Activity“.

What are some other retirement mistakes that can have huge consequences down the road? Share your thoughts with us on Facebook! For even more useful information on everything personal finance, visit MoneySmart today!

 

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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.