Nobody likes to be on the wrong side of bad money decisions – especially when you’re retired or about to retire. Bad money decisions wreak havoc on your financial wellness and standard of living, while good ones can contribute to making your income last during retirement. The latter is, of course the goal at this stage of life: Not to run out of money as a retiree.

We’ve listed a couple of these bad decisions below – as well as their better counterparts.

Bad decision: Making up for time with risky investments

When it comes to looking for exceptional returns, it’s a truism that when something is too good to be true, it usually is. People close to retirement might seek out risky investment opportunities to provide the type of returns that will give their nest egg a healthy boost. Often, we can sniff out get-rich-quick scams with their promises of zero risk and abnormally high returns (usually ‘guaranteed’). But what about those investment opportunities that look semi-legit? When is something too good to be true?

Just One Lap and Fat Wallet alumnus and all-round sensible person, Kristia van Heerden, has some advice for improving your judgment skills. She suggests that you first consider the type of risk that’s offered:

“If it’s a guaranteed return of 15% on bonds, and government bonds offer 10%, then it’s too good to be true. If the return relates to an investment, compare it against the best-performing index over the last couple of years, i.e. if the SP500 averaged 7% the past 10 years, and another investment offers 10%, then tread with caution.”

Better decision: Risk wisely

You don’t have to stay clear of risk when you retire – you might be retired for 30+ years. This gives you (and your discretionary savings) sufficient time to hang out in the more risky camp. Craig Gradidge, Investment and Retirement Planning Specialist from Gradidge Mahura Investments, suggests that caution is needed when (for example) your retirement solution includes a guaranteed annuity. In that case more caution is beneficial because the bigger the investment you can make in a guaranteed annuity, the better the guaranteed income. However:

“There is less need to be cautious with discretionary investments such as share portfolios, tax-free investments and unit trusts. Investors can tap into the power of compounding in these products by investing in dividend/rental yielding assets that grow income over time, and generally at a rate ahead of inflation.”

Bad decision: Tata ma chance

Don’t leave it to the lottery, divine intervention or the hope of finding a financially stable life partner to get you through retirement. The odds of striking it big by correctly choosing all six lotto numbers is 1 in 20million.

Better decision: Multiple income stream options

When you are a couple of years away from retirement, and you realise your existing retirement savings won’t cut it, start to explore options for additional income streams during retirement. This could be part-time work or renting out a part of your property.

In our Retirees’ Investment Journeys series, Gert shared the perfect nest egg diversification example: When he retired he was debt-free, but he still opted to cash out a portion of his savings to purchase an apartment which he rents out to generate some income. He also took up beekeeping as a hobby – and an additional income stream.

Bad decision: ‘It is what it is’

Yes, it probably is. But this mindset can harm your financial wellness in the long term.

Better decision: Be involved

To better your chances for having your money sustain you throughout your retirement, you need to be close to it. Are your investments performing as they should? Should you park your discretionary savings somewhere else for a while? Are you spending more on healthcare – and do you need to cut down on personal spending to prioritise healthcare? Regularly check in with your statements, your advisor, and your budget.

Saving for retirement is the biggest investment most of us will ever make. Sadly, it can also be very complicated. In this monthly blog, Carina Jooste responds to common retirement questions, ranging from which products are best suited to different circumstances to efficient tax treatments.