Will you have savings regret?

By Suzie Barnaby

People playing chess

It would be nice to think that we could all sail through life without having regrets. That we could have the capability of making all the right decisions at all the right times.

Unfortunately, this is not the case and sometimes we may look back with the benefit of hindsight to realise that if we were given a second chance, that we may have approached a situation differently.

Decisions around managing money, savings, investment and debt are often some of the biggest that we have to make in our lives and for that reason these decisions can often be laced with lessons that we'd appreciate if we had the change again.

Recently, the National Bureau of Economic Research in the US set out to understand what regrets retirees aged 60 to 79 have in regard to savings for retirement.

The respondents were asked whether, if given the chance to live their lives over again, would they have saved differently?

Around two thirds of respondents voiced savings regret, and one third were satisfied with their savings decisions earlier in life.

The study* showed that some of the biggest reasons for savings regret came down to unanticipated negative events occurring in people's lives. Because these events had been largely unexpected, the financial burden they inflicted was unplanned for.

Ten scenarios were identified as increasing the probability of savings regret in someone after the age of 60. These are expressed below with a corresponding percentage of likelihood to cause regret.

  1. Having very low financial literacy (81%)
  2. Being struck by poor health that prevents you from working (79%)
  3. Being laid off and spending a period unemployed (77%)
  4. Earning less than expected (76%)
  5. Getting divorced (74%)
  6. Making bad investments (70%)
  7. Being hit by major medical bills (68%)
  8. Overestimating Social Security (69%)
  9. Not making long-term plans (64%)
  10. Procrastinating (64%)

If you feel like you may need some help with your financial planning so you can decrease your chances of experiencing savings regret, we recommend asking for professional advice.

It's never too late to start making smart financial decisions to help build the life that you want to live and to ensure that when you get the opportunity to review your retirement in hindsight, that there are no financial regrets.

Find out more

Suzie is a Financial Planner AFP®. She works with clients to ascertain their life stage goals and plan financially to achieve them. She is passionate about educating clients, so they can make well-informed decisions in relation to their own financial situation.

If you would like to learn more about planning financially for your future, you can contact Suzie on 02 6583 1735 or email suzie.barnaby@morgans.com.au.

* Source document: https://www.nber.org/papers/w25238