Welcome to a wonderful new year!

The summer holidays are always a good time to reflect, to take time out, read, relax, and so recharge your batteries for the year ahead. This year was no different for me although I did spend more time than usual reading.

What struck me was what seemed to be an uptick in the number of older Australians making what I see as fundamental errors in managing their finances as they move into retirement, and with that loosing most, if not all, of their precious retirement savings.

There were two mistakes that stood out to me.

The first was a chap who decided to manage his retirement savings himself and out of an abundance of caution, decided just to invest in term deposits. I’ve seen this strategy play out time and again over the past twenty years and the outcome is often tragic.

These situations often play out as follows. Not satisfied with the interest rates offered by the big four banks, he started chasing ever higher rates of return on so called ‘term deposits’ and so found himself constantly looking around for better rates on the internet.

This led him to a company that seemed to be offering excellent rates on term deposits. He did his homework, they looked and sounded authentic on their website and so slowly, he started investing all his money in various ‘term deposits’ with them.

Then suddenly they stopped replying to his emails and of course, he soon discovered it was a scam. The company didn’t really exist, and his funds had swiftly found their way to a third world country.

This isn’t new, of course. Victorians were caught in a similar trap when the Pyramid Building Society collapsed in the early nineties. That doesn’t make it any less heart breaking.

Another situation I read about was an older Australian, overwhelmed by the prospect of managing her substantial superannuation savings, decided to do nothing. The funds are sitting in cash earning almost no interest and she is just drawing down the minimum she can get by on from month to month, with a vague hope her money will last as long as she does.

Eventually, she will qualify for the age pension. Eventually all her savings will be gone.

Retirement can be daunting, but it need not be. In fact, I believe retirement in Australia is a good news story with the Federal Government putting in place key policies, which among other things, should mean most older Australians will never pay tax again.

If you know of anyone struggling with managing their savings as they move into retirement, please encourage them to contact me. If they mention this newsletter, I am happy to send them a free copy of my book The No-Regrets Guide to Retirement, if they are happy to pay for the postage.

It could be a lifesaving, if not retirement saving, moment for them.

Patricia Howard

0427 429 817

Patricia@patriciahoward.com.au