Retirement planning in your 60s: Four mistakes that can derail your savings
As the deadline to retirement approaches, good intentions are no longer enough.
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There is a particular danger in the five years before retirement.
For decades, we tell ourselves we will save more next year, sort out our investments eventually, get healthier when life settles down, or stop financially supporting our adult children when they finally get their act together.
Then suddenly, the runway is five years long.
The cans we have spent a lifetime kicking down the road are running out of road. There is less time to recover from poor decisions, less opportunity to compensate for inadequate savings, and considerably less room for the unexpected.
Real-world high stakes
Sandy (name changed), one of my clients at my preventive healthcare and ageing-support company Age Brightly, is 65 and wants to work until 70. Financially, she needs those five years of income to make retirement work.
You might assume ageism is her biggest obstacle. Anyone over 55 knows it exists, and at 65, it isn’t exactly improving.
But needing to work, being capable of working, and finding someone willing to employ you are three very different things that triangulate into financial and health risk for Sandy.
We cannot control employers’ attitudes or the labour market. But we can influence our health, financial resilience and ability to remain employable.
For Sandy, the stakes are high. If she cannot work another five years, she risks becoming financially dependent on the very family members who currently depend on her, with consequences felt across generations.
Your health is a financial asset
Sandy’s ability to earn is one of her most valuable assets. Yet it depends on something rarely appearing on a balance sheet: her health.
Her recent Brightly assessment identified several emerging risks, but two threatened her ability to work another five years: fracture risk and cognitive decline.
A fracture at 65 can mean months out of work, reduced mobility and permanent loss of confidence and independence. According to Osteoporosis NZ, approximately one in two women over 65 will experience a fragility fracture, caused by weakened bones.
Cognitive decline is equally concerning. Hearing loss, cardiovascular health, sleep and physical activity can all influence brain health. But how often are these risks assessed together, monitored and addressed before problems emerge?
Changes in memory, judgment and performance can threaten employability. Employers notice these changes, even when employees don’t want to.
The challenge is that health can decline long before symptoms become obvious. Small changes are dismissed as normal ageing, and because decline isn’t routinely measured, emerging risks often go unrecognised.
We spend decades protecting our income and investments yet rarely consider how much our retirement depends on remaining healthy enough to keep working. It’s a financial risk we barely discuss.
Hope is not a savings strategy
Sandy’s financial position is equally confronting.
On paper, she could save $60,000 annually. In reality, she’s saving just $10,000 through additional KiwiSaver contributions. Her other savings are outweighed by credit card debt. That’s $50,000 a year slipping through the cracks, much of it supporting her adult children rather than building her retirement.
At 65, we can’t build a retirement plan around the person we hope to become. We must work with who we actually are.
Expecting someone who has struggled to save for decades to suddenly develop extraordinary discipline isn’t a strategy. It’s wishful thinking.
Sandy needs structure, support and accountability, not another motivational conversation.
Her investments also need attention. Some are performing 40% below expectations, masked by regular contributions. Her balance is growing, creating the illusion of progress, when much of that growth is simply her own money going in.
Five more years of poor returns, inadequate saving and credit card interest is a combination she cannot afford.
The financial vampires
Then there are Sandy’s three adult children, and a few other hangers-on.
Much of Sandy’s overspending isn’t on herself. When the children need something, Mum puts it on her credit card, with promises of repayment.
And they repay her. Sort of.
Small, unpredictable amounts trickle in. Enough to claim they’re paying her back, but not enough to cover the interest, let alone reduce the debt.
The children enjoy the spending while Sandy carries the financial consequences. They’re effectively making withdrawals from a retirement fund that isn’t theirs.
It’s easy to tell parents to stop helping their children. But it’s harder to put into practice when they’re struggling and you have the means to help. Love, guilt and obligation are powerful motivators.
But there’s a cruel irony in compromising your own retirement to protect your children’s financial wellbeing, only to become dependent on them later.
Sandy has just started receiving NZ Super. Rather than allowing lifestyle spending to absorb this extra income, we’re taking it straight out of circulation. Money she doesn’t see is harder to spend.
Next year, we’ll tackle the children together. Sandy needs someone in her corner to challenge expectations, establish boundaries and have the uncomfortable conversations without getting caught in the family guilt.
Five years to change the outcome
Sandy doesn’t simply want to retire at 70. She wants choices about where she lives, how she spends her time and how much she can help others without compromising herself.
That’s what financial independence buys us: options.
Sandy’s situation isn’t hopeless, but the deadline is real and there’s little margin for error.
She needs to protect her health, accelerate savings, address debt, improve investment returns and reset family expectations.
For others, the priorities might be paying off a mortgage, improving fitness, managing chronic illness or reconsidering the family home.
Five years is enough to materially improve your retirement, but only if you stop confusing good intentions with action.
Sandy knows what’s at stake, and she’s ready to do the work.
The runway is getting shorter. Health and wealth are inextricably linked. Neglect one, and you risk compromising the other.
This isn’t the time to hope things work out. It’s time to make them both work.
Four mistakes to avoid in your 60s
1. Confusing moving money with saving it
Multiple accounts labelled Holidays, Treats and Emergency Fund provide a dopamine hit, but constantly transferring money between them isn’t building wealth. Sometimes you’re just robbing Peter to pay Paul, who’s already borrowed from Pauline.
2. Hiding behind a rainy-day fund
If your credit card debt exceeds your savings, your financial security is an illusion. Clear the debt, even if it wipes out your savings. Available credit can provide an emergency fallback, but isn’t a substitute for cash reserves. Confronting your true position can scare the hell out of you. Good. You can’t fix what you won’t face.
3. Relying on willpower
Put savings on autopilot, directing money into investments before you can spend it. Don’t wait for better habits. Force the outcome and let the habits catch up.
4. Ignoring invisible health risks
Decline often starts before symptoms become obvious. In your 60s, protect your ability to earn. In your 70s, focus on avoiding preventable hospital admissions. In your 80s, preserving independence at home becomes paramount.
Health and wealth underpin all three. The clock is running. False comfort is a luxury you can’t afford.
Hannah McQueen is the founder and director of Age Brightly, and the host of The Next Bit podcast on iHeart.com