The top 5 worst money mistakes seniors make

18 Aug 2015

Not many people enjoy taking care of paperwork and getting their financial house in order, but when retirement takes place and your lifestyle significantly changes, so does your budget.

We rounded up some of the most common money mistakes that retirees make and how you can save money. What’s not to love about that?

1. Not planning a budget

When you’re retired and not earning a full-time income anymore, it’s more important than ever to create a budget, advises Michelle Hutchison, money expert at finder.com.au.

“You are now less likely to be able to access money and you need to think about how to make your money last though your retirement,” she says. 

It is likely that things will cost you more because you’ll be at home and you won’t be at work every day. Power bills, electricity, gas and heating and things like that could increase because you’re using these things more often. It might be a good idea to opt for a flexible or off-peak rate for things like energy.

2. Delaying payment of bills

No-one likes receiving bills, but the good news is that you can save between five and 35 per cent by taking care of them on time, says Laura Crowden, spokesperson for iSelect. Why not set up an automatic debit plan so you don’t even have to think about it each month?

3. Not regularly reviewing energy plans

Speaking of bills, if you’d like to reduce your energy bill, it’s a good idea to look over your plan every 12 months to make sure you’re getting the best value for your money, suggests Laura. It’s really important that you understand your energy bill and know whether you are being charged a single flat rate for your energy or whether it varies between times of day.

Unfortunately, the bulk of your energy bill is made up of network charges, so reducing your consumption won’t actually reduce your bill significantly. Check comparison websites to help you out.

4. Forgetting to update your will

It’s essential that you revisit your will when circumstances change with your beneficiaries, advises Heidi Schwegler at AHS Financial. For instance, one of your children might be going through a separation and his or her ex-spouse could be potentially entitled to a share of the estate. Maybe you’ve loaned one child money and forgotten to include this in the will, meaning there could be an unfair distribution of your assets. 

“Are the people you nominated as Executor or Beneficiary still relevant? Having a good estate plan means the right assets going to the right people at the right time,” says Schwegler.  “Are your wishes going to be carried out should something happen to you?”

5. Failing to having appropriate Powers of Attorney in place

“It is important to ensure you have up-to-date Powers of Attorney in place as soon as possible, because it is impossible to obtain a Power of Attorney if your mental capacity has diminished,” warns Heidi Schwegler. That person will act on affairs on your behalf and you don’t want the states or courts to be making important decisions for you.  

“Be careful when choosing a Power of Attorney as it needs to be someone you really trust. Also, be sure to tell that person where your paperwork is located in the event they need to use it.”