But it’s not too late. Ultimately, what you do in your 40s and 50s determines how you spend your retirement, writes authorised financial adviser Joseph Darby.

1. Failure to plan

Failure to do any kind of financial planning is a sure-fire way to struggle later in life.

If you don’t plan, you immediately restrict what your retirement has the potential to be. Planning can be the difference between sipping cocktails on beaches all over the world by age 65, or having to work well into your 70s.

For many couples, failing to plan includes not considering what to do once the mortgage on the family home is repaid.

One common issue financial advisers see is people diligently spending years paying off their mortgage, then when it’s paid off, wasting this new-found surplus on unnecessary spending.

The simple fix for this is to have a financial plan and stick to it.

2. Financially supporting adult children

Helping adult children with living expenses makes sense as long as the children seize the opportunity to save money on day-to-day costs and direct it towards standing on their own two feet one day.

Unfortunately, it’s all too common that adult children use this situation to make the most of spending their extra income, and avoid taking responsibility for their own lives.

This puts their parents under unnecessary financial pressure and is another factor that can delay retirement.

But it’s not too late. Some parents who have adult children living at home may benefit from practising a little ‘tough love’.

Perhaps it’s time to have some open discussions about when it’s time for the adult children to leave the nest.

3. Inadequate protection

It’s natural to think that the worst won’t happen to you – catastrophic events such as a terminal illness diagnosis or an early death are things that happen to other people, right?

Wrong – as an example, in New Zealand alone, more than 23,000 people are diagnosed with cancer every year.

As you age, your health declines and so your risk goes up. Without adequate protection in place, you could leave yourself and your loved ones at risk of financial ruin.

To avoid this, consider building a large contingency fund or buying health or income protection insurance.

4. Lack of diversification

Diversification is the first principle of investing, but all too often I see people with most of their wealth in one type of asset.

This means that all their investment eggs are in one basket, which places them at risk of that one asset class experiencing a downturn or drop in value.

In New Zealand, this is most commonly the risk with property, as many people in their 40s and 50s are property investors who have successfully enjoyed year after year of residential property price increases.

Unfortunately, past performance doesn’t guarantee future returns. Holding most of your wealth in property can expose you to risks like earthquakes, other natural disasters, or a housing market downturn.

Even worse, these investors are missing opportunities. There are simple and efficient ways to more evenly spread risk across different assets and across the globe.

6. Investing without advice

New data from Netsafe shows that Kiwis lost at least NZ$1.4 million to investment scams in the three months between April and June this year. That’s well up on the previous three months, when Kiwis lost NZ$913,000.

And that figure is rising as scammers become even more sophisticated in their offerings. They can make even the dodgiest of investments seem legitimate.

Investing without professional advice can cost you thousands of dollars.

First published 14 September, 2018

Story by Joseph Darby

Joseph Darby is an authorised financial adviser and Chief Executive of Milestone Direct Ltd. The views and opinions expressed in this article are those of Joseph Darby and not necessarily those of Milestone Direct Ltd. A disclosure statement is available on request and free of charge.

JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. This story reflects the views of the contributor only. Content comes from sources that JUNO considers accurate, but we do not guarantee that the content is accurate.