The 7 deadly sins of retirement
Written and accurate as at: Sep 15, 2025 Current Stats & Facts
You might be excited to put your working years behind you, but a few missteps along the way could take a lot of the joy out of retirement. From underestimating how much you’ll need to not being proactive with your super, here are a few mistakes you’ll want to avoid.
1. Not having a vision
The first mistake is expecting your ideal retirement to magically fall into place without any planning. Like any major life transition, it requires a bit of forethought and a solid financial strategy.
Ask yourself what you want out of your retirement years. Many people take to travelling and pursuing all the hobbies that they had long dreamed of but never had time for, while others are content to lead quiet lives devoting attention to their homes and families.
What you decide will then inform how much money you’ll need. If it turns out there’s a gap between the amount you have and what you should have, look for ways to make up the shortfall.
That might involve topping up your super in the few years leading up to retirement so you’re in a better position once you officially hang up your hat. And if you plan to sell the family home and move into a smaller one, there's also the option to use some of the proceeds of sale to make a downsizer contribution into your super.
2. Underestimating inflation
Confident as you might be about your retirement plan, it won’t be worth its salt if it doesn’t factor in inflation. Say you plan to live on $4,000 a month in retirement. That might be more than enough to meet your needs in the early years, but fast forward 10 or 15 years and that same amount may not stretch nearly as far.
3. Underestimating how long you'll live
One of the biggest (and most consequential) variables in retirement planning is how long we’ll actually live. While many people rely on average life expectancy statistics for guidance, we should remember these are neither static – they can increase over time as living standards improve – nor predictions.
To put it another way: don’t assume that you’ll only need to fund 20 years of retirement. If you’re planning for a retirement that lasts until age 85, your finances might be woefully unprepared if you wind up living into your 90s or even hitting 100.
4. Getting the timing wrong
The timing of retirement isn’t always up to us. Some people continue working out of necessity – whether to boost their super, clear debts, or ride out a down market – while others are pushed into an early retirement because of illness or redundancy.
But then there are those who put off retirement out of uncertainty. They might not have a good idea of how much super they need and insist on working longer than they have to ‘just in case.’ Or there might be some mistaken beliefs at play.
One misconception that’s unfortunately common is that you can only retire once you become eligible for the Age Pension (which is typically age 67). But the truth is your super can be accessed much earlier than that. Don’t let misunderstandings like these cost you valuable years you could be enjoying not working.
5. Leaving your super in the accumulation phase
When you reach retirement age, there are two main ways you can receive your super: commencing an account-based pension or withdrawing it as a lump sum. Some people, however, leave their super in the ‘accumulation’ phase despite ticking all the boxes necessary to access it.
What they may not realise is that doing this has big tax implications. Any investment earnings in the accumulation phase will continue to be taxed at a maximum rate of 15%, unlike an account-based pension where investment earnings are generally tax-free. In other words, you could be giving up a key tax advantage without realising it.
6. Not taking advantage of your entitlements
For those who qualify, the Age Pension can be a valuable supplement to your super income, but it’s not something you can just set and forget. Your eligibility and the amount you receive depends on your income and assets, and these can change over time.
One thing to keep in mind is that Centrelink doesn’t automatically depreciate lifestyle assets like cars, boats or caravans, so their reported value can become inflated as the years go on. If you don’t update their current worth, you might wind up receiving less Age Pension than you’re entitled to.
7. Being too frugal
A surprising number of retirees pass away with most of their super untouched. This might come down to a desire to leave a large inheritance or an inability to shake the sense of scarcity that’s followed them throughout life. Whatever the reason, it should be weighed against the very real risk of squandering your golden years.
After all, spending within your means is admirable, but you don’t want to overdo it and deprive yourself of all the things that make retirement worthwhile. Think about working with a financial adviser to create a plan that occupies a sensible middle ground between over- and under-spending.