One of the privileges of financial planning is that we get to see, over many years, how small decisions play out in people’s lives. We see how the habits formed in one’s thirties affect the choices available in one’s sixties, and how seemingly harmless delays can become difficult trade-offs later on. Sadly, we also see how the absence of a proper retirement strategy can leave even high-income earners feeling anxious and uncertain as retirement begins to move from a distant concept to an approaching reality.

Most people do not make retirement mistakes because they are careless. In our experience, the bigger issue is that life gets busy, competing priorities take over, and retirement planning keeps being pushed into the future. The intention to save is often there, but without structure and urgency, good intentions rarely translate into long-term financial security. While each client’s circumstances are different, there are certain retirement savings mistakes that we encounter repeatedly. These mistakes are not always obvious at the time, but left unchecked, they can materially affect the quality of life a person is able to enjoy in retirement.

1. Starting too late

The most common mistake is also the most difficult one to undo: waiting too long to begin. In the early stages of one’s career, retirement may feel too far away to deserve serious attention. For younger investors, the idea of saving for something 30 or 40 years into the future can feel abstract, particularly when there are more immediate and more exciting demands on their income.

The problem with this is that time is the most valuable asset a retirement investor has. Starting early gives your money the opportunity to benefit from compounding, which is where investment growth begins earning growth of its own. In the first few years, this can feel painfully slow, your contributions may seem insignificantly small, and it may be tempting to assume that starting a few years later will not make much difference.

But over decades, those early contributions carry far more weight than many people realise. This is because when you start late, you do not simply lose the contributions you failed to make – you lose the years of growth those contributions could have generated. This means that those who delay saving often need to contribute significantly more later in life to achieve the same outcome, and by then their financial commitments may be even greater.

Starting early does not mean you need to have everything figured out, but it does mean giving yourself the benefit of time. Even modest contributions, made consistently and invested appropriately, can create a foundation that is far easier to build on than trying to catch up later.

2. Saving without knowing what is actually required

We come across many people who are saving for retirement but have no idea whether they are saving enough. They may contribute to a pension fund, provident fund, retirement annuity or investment portfolio and assume that, because money is being set aside, they are on track. However, a contribution is only meaningful when measured against a goal.

To know whether you are saving enough, you need to understand what level of income you are likely to need in retirement, when you intend to retire, how long your money may need to last, what inflation may do to your spending power, and what investment return assumptions are being used. Without this, retirement saving becomes little more than guesswork.

We often find that people are reluctant to calculate the number because they are worried about what it may reveal. But not knowing does not remove the problem – it simply delays the point at which it must be confronted. A shortfall identified early can usually be managed through a combination of increased contributions, adjusted expectations, a longer working life, better investment structuring or more disciplined spending; whereas a shortfall discovered five years before retirement is far harder to repair. A retirement plan should give you a clear sense of where you are, where you need to be, and what needs to change to close the gap.

3. Cashing in retirement savings when changing jobs

One of the most damaging retirement decisions is withdrawing accumulated retirement savings when changing employment, but it is also one of the most common. A resignation, retrenchment or career move often creates the opportunity to access retirement capital, and for many people, the temptation is strong. While the money may feel useful in the moment, keep in mind that the long-term cost can be enormous. The immediate impact is the tax payable on the withdrawal, but the greater cost is the loss of future growth. Remember, a retirement benefit withdrawn at age 35 is not just the amount taken at that point – it is the amount that could have grown, compounded and remained invested for the next 25 or 30 years.

In our view, preserving retirement savings when changing jobs is one of the most important disciplines in building long-term financial security. Whether the money is transferred to a preservation fund, a retirement annuity or another approved retirement structure, the principle is the same: retirement money should be protected for retirement.

Every early withdrawal increases the pressure on future earnings and can create a dangerous pattern where retirement savings are seen as a source of emergency funding rather than long-term capital. Once that habit is formed, it becomes very difficult to build sufficient retirement wealth.

4. Investing too conservatively

Many investors believe the greatest risk to their retirement savings is market volatility. They may become uncomfortable when their investment values fall and, in response, choose portfolios that feel safer because they fluctuate less. While this is understandable, it can be a costly mistake when saving for a long-term goal. This is because the real risk for many retirement investors is not short-term volatility, but failing to achieve sufficient growth above inflation. Inflation can be particularly dangerous because it erodes wealth slowly over time, quietly reducing the purchasing power of your money. A portfolio that feels stable but does not grow meaningfully in real terms may leave you with less retirement income than you need.

This does not mean investors should take inappropriate risk – it means that risk must always be aligned with time horizon, personal circumstances, income needs and emotional tolerance. That said, younger investors, or those with many years until retirement, generally have more capacity to tolerate volatility because they have time to recover from market downturns. Avoiding growth assets too early can make the retirement target much harder to reach. Even in retirement, most people still need some exposure to growth assets because retirement can last for 25 to 30 years or longer. Becoming too conservative too soon can place pressure on the sustainability of one’s income, particularly in a rising-cost environment. Ultimately, the objective is not to eliminate risk entirely, but to ensure that the investment strategy is appropriate for the job it needs to do.

5. Treating retirement planning as a once-off event

Retirement planning is not a document that gets prepared once and then filed away, but rather an ongoing process that needs to be reviewed and adjusted as life unfolds. Income changes, markets change, tax legislation changes, family responsibilities change, and personal goals change. That means that a plan that was perfectly appropriate five years ago may no longer be suitable today.

A person may set up a retirement annuity, join an employer fund, or choose an investment portfolio, and then assume the matter has been dealt with. But retirement planning requires regular attention. Contributions need to be reviewed, investment portfolios need to remain appropriate, assumptions need to be tested, and progress needs to be measured against the intended outcome.

Life events such as divorce, remarriage, children, the death of a spouse, emigration plans, business ownership, illness, retrenchment or the need to support family members can all change the shape of a retirement plan – and without regular reviews, these changes can quietly derail even the best intentions. Importantly, the planning should also continue beyond the date of retirement. The decisions made at retirement are critical: how much income to draw, how to invest living annuity capital, how to manage tax, how to provide for a surviving spouse, and how to reduce the risk of running out of money.

A well-funded retirement can still be compromised by poor drawdown decisions or an investment strategy that is not suited to the retiree’s income needs, which is why retirement planning should not stop when employment income stops. In many respects, the decisions made at and during retirement are just as important as the years spent saving towards it.

Retirement should not be approached with crossed fingers and vague hope, but rather built deliberately, with a clear understanding of what is required and a willingness to make decisions that serve your future self. The earlier those decisions are made, the more options you are likely to have. And in retirement planning, options matter, because they are what ultimately give people the freedom, dignity and peace of mind to live the next chapter of their lives on their own terms.

Have an amazing day.

Sue