The Biggest Mistake You’ll Make With Your Retirement

Well, it looks like the nation’s superannuation reforms are now in the hands of ... Pauline Hanson.

And that’s quite concerning, given that I seriously doubt Pauline could tell the difference between a hedge fund and a halal burger.

“Please explain?”

So until Canberra clears its political bowels, it seems that detailed financial planning is off the agenda. But that’s not necessarily a bad thing, because it gives us a chance to talk about the number one mistake people make when they retire.

And no, it’s not retiring with too little dough.

In fact, just the opposite. I’ve found the people who make the biggest mistakes in retirement tend to be those (particularly men) who have million-dollar nest eggs.

The Biggest Mistake You’ll Make With Your Retirement

It’s said that the two most dangerous years of your life are the year you’re born and the year you retire.

You made it through the first one, so let’s talk about the second, with the help of a case study:

Fifteen years ago, a friend of mine’s father retired.

He’d spent 30 years working as an engineer in a government department.

Then he turned the magic age of 54 and 11 months, which was the kick-off age for what is arguably one of the most generous retirement schemes in history -- a defined benefit pension that paid out a factor of his final wage, every month, until the day he died.

He’d never have to worry about money again.

As was the tradition, his workmates gave him a send-off on his last day. The irony wasn’t lost on him: he’d spent his entire life rushing around chasing his tail. And the day he could finally put his feet up and relax they gave him… a bloody gold watch.

Tick. Tock.

On the first day of his retirement, he woke up at the same time he always had. Had a shower. Put on his suit. Made some breakfast. Caught the bus into the city. And then … sat in a coffee shop and read the newspaper for three hours. After that he caught the bus home, wondering what the hell he was going to do with himself for the rest of the day.

The Curse of the Million-Dollar Super Fund

Here’s you: “Curse? A million bucks in my super? I’d, I’d…”

Here’s me: “Wake up whenever you want?”

Here’s you: “Yeah!”

Here’s me: “Go on the Baby Boomer equivalent of a Contiki tour (hello Trafalgar) and get pissed with other suburbanites?”

Here’s you: “Well, maybe once a year...”

Here’s me: “Sure. And for the other 11 months of the year you can sit at home, make smalltalk with your wife and her friends, and wait for your kids to drop off the grandkids ... every second Thursday.”

Here’s you: “Ummm, I guess. What else have you got?”

Here’s me: “Death?”

Most people work incredibly hard throughout their careers to provide for their families -- especially those who beat the odds and retire with million-dollar super funds.

And, particularly for men, their work comes to define them. Not only does it build their super, but it gives them their self-worth and something productive to do.

These workhorses don’t realise that their career has been to the detriment of friends, hobbies and cultivating other interests (well, besides drinking beer and watching the cricket), till after they get home from the Trafalgar tour.

So, what’s the solution?

The Golden Rule of Retirement

The golden rule of retirement is ... keep working.

Of course most people don’t have a choice, given that research from the University of Melbourne suggests that only 53 per cent of couples and 22 per cent of singles are on track to achieve a comfortable level of retirement income.

Yet that doesn’t mean you have to keep your existing job (especially if you’re a tiler with dodgy knees).

You can do something less labour intensive, and possibly not full time. And if you do, the Government will bend over backwards to help you.Once your reach your Age pension age, you’ll not only be able to draw a tax-free pension from your super, but in addition you can both earn up to $28,974 each without paying a cent of income tax. You can save up for a trip of a lifetime, and stretch it further by making it a working holiday. Throw all that into a retirement calculator -- it works better than Viagra!

Yet what if your advisor says, “You’re a winner, you don’t have to work another day in your life.”

Barefoot says, “Work anyway” (even if it’s a day or two a week).

Work is good for you: retirees who continue doing some kind of part-time work are found to be the happiest and the least likely to suffer depression.

Why not use the skills you’ve honed over your career to do some useful work?

I meet so many Uber drivers who are well-to-do retirees who don’t need the money -- they just like chatting to people and earning their keep at the same time.

And I’ve got one final tip for you: think about your legacy. What do you want to be known for? What is it that you could be known for?

You don’t even need to be wealthy. I know of a bunch of old tradies who build wheelchairs for kids in third world countries. And last week I wrote about a stay-at-home mum who built a hospital in Uganda. One of the greatest human needs is the desire to be useful and appreciated. Helping people is the key to your own happiness.

The bottom line is this: in retirement you need enough money to live… and enough to live for.

Oh, and you may be wondering what happened to our ‘coffee shop’ engineer.

Well, after three months of reading the newspaper, one day he looked at his gold watch and decided it was time to do something. He needed meaning and purpose. He had something more to give. So he went back and became a teacher, and worked happily away for the next 14 years.

Tread Your Own Path!