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FIVE COMMON MISTAKES TO AVOID WHEN PLANNING YOUR RETIREMENT BJORN LADEWIG, head of distribution at retirement income specialist Just SA, pinpoints common mistakes retirees make about their finances in retirement. WHEN you’re ready to retire, one of the biggest decisions you’ll face is choosing an annuity to provide you with a regular income in retirement. Considering the unpredictability of investment markets, increased longevity and a crowded retirement product market, it’s not an easy choice. Yet the stakes are high and the consequences far-reaching. Even worse than worrying if you’ve saved enough for retirement during your working life is running out of money after you have already retired. In fact, research from Just SA has shown that 60% of people in or approaching retirement lack the confidence that their income will cover their monthly expenses throughout retirement. Our experience has seen retirees make the same errors time and time
again when it comes to important decisions about retirement income. Specifically, there are five common mistakes that you should try to avoid. 1. UNDERESTIMATING HOW LONG YOU WILL NEED YOUR RETIREMENT INCOME TO LAST Longevity is an accelerating macro trend, with World Economic Forum research revealing an average life expectancy of at least 100 for those born after year 2000, which is more than a decade longer than their parents’ generation and two decades longer than their grandparents. To help protect and thus stretch your retirement income further, it’s a good idea to ensure that your essential spending is covered with a
guaranteed, sustainable income for the rest of your life. You should also be sensible with any other assets and investments you may have. For example, if you are drawing more than 4% from these assets, it may not be sustainable for life. Finally, where possible, a side hustle or freelance work is a great way to bolster your retirement income. 2. PUTTING TOO MUCH VALUE ON FLEXIBILITY Many people choose a pure living annuity as their retirement income solution for its perceived flexibility. However, you should not forget that this flexibility comes with increased risk. Research has shown that the majority of people in and approaching retirement don’t want to take risks with their retirement
