The costly retirement planning error top financial advisers see people make constantly

Mathew Cassidy – Partners Wealth Group

The most common mistake is leaving retirement planning too late – and it’s completely understandable. In your 40s, the focus is often on raising children, paying school fees and managing the mortgage. Then suddenly it dawns on you: I need to start thinking about my retirement.

While those earlier years are full of financial commitments, that’s exactly when the power of compound interest can work most effectively in your favour. Even small, simple strategies implemented early can make a significant difference to your retirement outcome.

Another key mistake is that many people, particularly in their mid-40s, don’t seek professional advice and therefore have no clear understanding of how much they’ll actually need in retirement. This figure depends on a range of personal factors that many have never been guided through. Having a clear strategy and pathway not only helps build wealth but also reduces financial stress as you move closer to retirement.

Andrew Dunbar – Apt Wealth Partners

Many people overestimate how much they’ll need. They focus too much on accumulating wealth and not enough on planning for income sustainability. This often leads to working too long in a job they don’t love, rather than either retiring or working for passion and purpose.

Many also make the mistake of believing retirement planning is only about financial planning. In reality, it is a huge emotional and lifestyle change, and an identity shift.

Just as critical is planning for that emotional transition, considering how to replace routine, accomplishment, social connection and activity is critical.

Ben Kohn – Focus/Link Financial Services

One of the most frequent mistakes people make is viewing retirement planning as a distant event, rather than a dynamic and evolving phase of life.

We often see prospective clients focus solely on accumulating a lump sum, while neglecting what truly matters: designing the lifestyle they want in retirement, mapping the income streams to support it, and adjusting when circumstances change.

Any financial plan should be a living document that evolves as personal circumstances and broader economic factors shift.

At our firm, we emphasise that retirement isn’t simply about stopping work and drawing down investments. It’s about transitioning from wealth accumulation to income support, developing tax-efficient drawdown strategies (including the use of retained earnings in companies or SMSFs), and aligning portfolio risk with lifestyle goals.

If clients haven’t thought through their spending patterns, life transitions (such as health, aged care, or family changes), or how they will remain engaged and purposeful, even a substantial nest egg can feel misaligned – or worse, stressful.

Because the senior advisers at Link Financial Services come from holistic, education-driven backgrounds (I’ve been advising since 1995, and we’ve held our ASIC licence since 2003), our message is clear: start early, define the “what” of retirement, then reverse-engineer the “how” and embed flexibility. The best way to avoid costly mistakes is through clarity, strategy and ongoing review.

Chris Smith – VISIS Private Wealth

Basing decisions only on the knowledge they have built over their lifetime and what they are reading.

In my experience, the complexity that is required for an elegant retirement solution is often more advanced than the typical person has knowledge of.

There are so many ways to achieve the results that a retiree is looking for.

Most people make the mistake of taking a far too conservative approach to strategy and investment. Some people will be retired for more than 30 years and still have goals, like travel, helping family and living well.

So, having a focus on preserving capital does not have to be at the detriment of creating more wealth.

Ultimately, cost of living will rise over the retirement years, so ensuring your money at least keeps pace with this rate is critical.

Kellie Davidson – Pitcher Partners

Don’t wait until later in life to start both planning and saving for retirement.

The sooner you begin and have the mindset, the more you’ll benefit from compound returns, which are all the more valuable when you have the capacity to maximise your retirement savings within the superannuation environment.

This is due to the concessional tax rates within superannuation allowing your savings to compound at a higher after-tax rate. Even small, regular contributions early in your career can grow significantly by the time you retire, thanks to compounding.

I am often asked what amount is needed to fund retirement, and while the answer is quite personal and based on individual retirement spending needs, many underestimate the true amount needed to maintain established lifestyles over the long term.

Even wealthy individuals often assume that their significant superannuation balances, investments, or other assets will be sufficient, sometimes overlooking factors such as inflation, increased longevity and rising healthcare or aged care costs.

This oversight can be heightened by a focus on current wealth rather than future expenditure patterns, particularly as lifestyle expectations remain high and may include travel, hobbies or supporting family members.

Troy Theobald – RFS Advice

Procrastination. People put it off till tomorrow. And more often than not, people could have retired earlier or been in a much better position if they had sought advice earlier.

Amanda Fong – Escala Partners

It’s not so much about the mistakes people make, rather a misconception that superannuation alone will cover future needs.

Many underestimate their life expectancy and don’t adjust, for example, for inflation or changes in spending habits.

Building a plan that is a combination of super, investments and cashflow flexibility is key to maintaining a comfortable lifestyle.

Laurel Moulynox – Morrows Private Wealth

The biggest mistake people make when planning for retirement is not starting early enough. This isn’t just a women’s issue; it’s something I see with both men and women.

Too often, people put it off until they’re much closer to retirement. While I always say it’s never too late to start, the earlier you begin the better. Ideally, planning should start well before those final years.

Even in your 20s and 30s, when you might be juggling school fees or a mortgage, it pays to contribute a little extra into your superannuation.

Putting just an extra $100 a month into your superannuation at that stage could add tens of thousands of dollars to your retirement savings by the time you’re 60.

Retirement funds need time to build, so you can take full advantage of the power of compound interest.

This article first appeared in The Australian as The costly retirement planning error top financial advisers see people make constantly