Retirement is one of the greatest age milestones and financial transitions one can achieve after years of employment or of running their business.
Many retirees see retirement as transitioning from the working grind to days of leisure and relaxation. However, there is another shift at play, which is ending the days of earning an income and beginning the days of measured spending.
Himal Parbhoo, FNB CEO of cash investments, says, “When entering retirement, you are shifting to measured spending and retirees need to have a clear game plan in mind on how they will manage their money and stretch it till the end. Even though many have planned and saved for years, entering retirement is not a time to set autopilot on your finances, but a time to understand your finances and develop a personal relationship with your money.”
Parbhoo shares six common mistakes retirees make during their golden years:
Overspending in retirement
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. Retirees underestimate the amount of money they’ll spend in those first few years of retirement. With so much extra time on their hands, it’s easy to make a lot of little purchases that add up to a lot of money over time. To avoid this mistake, create a detailed but realistic budget and stick to it. Be sure to work with your financial advisor to find a withdrawal rate that will stretch your money…