5 common retirement planning regrets and how you can avoid them

October 11, 2023

Having regrets is part of life, but one area where you really don’t want to experience this is in your retirement planning. 

Sadly, a study reported in Money Marketing has found that, given the chance, 32% of UK retirees would make different financial choices for their retirement. 

It can be overwhelming to think of the decisions you need to make about your retirement. But as world-leading athlete Jackie Joyner-Kersee once said: “It is better to look ahead and prepare than to look back and regret.”

So, to ensure you can enjoy a post-work life free of financial regrets, read on to discover some common retirement planning mistakes and how to avoid them. 

1. Reviewing your investment portfolio too infrequently 

While it’s usually sensible to hold investments for the long term, that doesn’t mean you should entirely ignore your investment portfolio. 

Depending on how your various holdings perform, your portfolio can become unbalanced. For example, the higher risk investments in the portfolio could perform very well over the course of a year, while the lower risk ones underperform. Left unchecked, the associated returns can mean that, the following year, your portfolio has a greater proportion of high-risk investments than you initially intended. 

Over time, if these changes aren’t corrected, your portfolio will become unbalanced. This could affect its potential to achieve your long-term financial goals. 

So, checking in with your investments semi-regularly can be a helpful way to ensure that your portfolio continues to have the opportunity to generate the returns you need.  

2. Forgetting to account for inflation

While your retirement planning is usually centred around your personal goals, there’s one economic factor that also needs to be considered: inflation. 

Forgetting to factor this in means that, by the time you retire, the cost of living is likely to be much higher than it was when you first made your plans. As such, the money you have saved may be insufficient for the expenses you are planning. 

If this happens, you might need to adjust your plans for retirement to live a less extravagant lifestyle, or you could risk running out of money much sooner than you thought possible. 

A helpful tool for avoiding this problem that your financial planner can offer is a cashflow forecast. This allows you to model your projected wealth in retirement based on existing assets and income, predicted investment performance, and assumed inflation. 

Your planner can subsequently help you to identify and address any potential shortfalls in income based on these assumptions. 

Read more: Inflation: The Silent Thief

3. Withdrawing too much from your pension in your early retirement

Sometimes, saving up for your retirement turns out to be the easy part. What’s trickier is deciding how much to take from your pension as income when you retire. How do you ensure you have enough to live on now without running out of money too soon?

This is a particular risk during times of high inflation, as mentioned above. It’s tempting to take out more funds to cover rising costs, but to do so without consideration could leave you with a shortfall in later life.

It’s possible that your income needs may be higher in the first few years of retirement. When you are younger and healthier, you may want to take advantage of the opportunity to travel or pursue new hobbies. 

It’s important to balance these priorities with the needs you may have in later life so that you keep sufficient funds set aside to cover those essential costs. 

4. Not factoring in the cost of later-life care 

Life expectancy is increasing around the world; in Singapore, the average life expectancy is now 84.8 years. As such, there are now more people than ever before aged over 65 and Channel News Asia reports that, by 2030, 100,000 seniors in Singapore will require help with at least one daily activity. 

The cost of staying in a nursing home varies from $1,200 to around $4,500 a month. Neglecting to include this in your financial plan could leave you with a significant shortfall if you come to need help as you grow older. 

Avoid finding yourself in this position by taking the time to consider what type of help you might want in later life – for example, would you prefer to receive care at home or move into a residential facility – and research the potential costs. Factor this into your retirement plan so that you can have a specific pot set aside for this possible expense. 

5. Retiring without consulting a financial planner

A financial planner can be a real asset when you’re planning for, approaching, and taking your retirement. With a wealth of knowledge, experience, and tools at their disposal, they can help you to achieve the goals you’ve set and avoid costly mistakes too. 

If you were to retire without taking financial advice from your planner, you could risk: 

  • Overspending and running down your pension fund too quickly
  • Overpaying in fees for managing your pension and investment portfolio
  • Investing in inappropriate funds that aren’t aligned with your risk profile
  • Overpaying taxes, particularly if you pay taxes in Singapore and your country of origin. 

When you work with a specialist financial planner, you can benefit from their knowledge about managing finances as an expat. As such, you can feel confident that you’re making the most sensible choices for your pension savings. 

Get in touch

If you want to be sure you’re making sensible decisions for your retirement savings as an expat in Singapore, we can help. 

Either contact your financial planner directly, email us at hello@ascentawealth.com or fill in our online contact form to organise a meeting and we’ll get in touch.