Regret for the things we did can be tempered by time; it is regret for the things we did not do that is inconsolable.

This quote from English clergyman Sydney Smith is apt when it comes to retirement planning. A lack of savings can not be tempered by time once you've retired.

All too many Kiwis are making huge mistakes with their retirement savings, which may come back to haunt them when they can't afford to stop working - literally.

Here are 20 common retirement savings mistakes:


1. Starting too late. Ask most 20-year-olds and they think they'll never reach retirement age, or think they'll start saving for retirement in their 30s or 40s. Someone who starts saving at age 25 and puts away $1200 a year will have considerably more than a 45-year-old who saves $2400 a year for 20 years, even though both have put the same amount of their own money in. That's because the 25-year-old had investment growth for twice the time.

2. Not joining KiwiSaver now. Government and employer contributions shouldn't be ignored. It's hedging your bets at the very least. Even people who believe they will make it big in business should put at least the minimum into KiwiSaver. It starts to add up quickly.

3. Saving the minimum. Just because KiwiSaver has a minimum contribution, this doesn't mean that is a sufficient amount of money to be saving for a comfortable retirement. The Financial Services Council wants to see Kiwis contributing 10 per cent of income to KiwiSaver - with half of that coming from employers.

4. Investing too conservatively. People who invest all of their money in the most conservative of investments may not see it grow ahead of inflation at all. Professional retirement plans assume that people hold a proportion of growth assets.

5. Trusting simple projections. All too often investment projections look rosy because they don't take into account tax and inflation. Neither can be avoided.

6. Not diversifying. This one is so obvious I wanted to leave it out. Yet every year there are people who lose their life savings because they didn't diversify.

7. Thinking that owning a home is enough. Many people approaching retirement expect to downsize the family home and live off the equity. Steve Morris, a financial adviser at SW Morris and Associates, points out that Treasury has found most people are disappointed at the outcome of selling down their family home. Some of the problems are that the replacement home is more expensive than anticipated, they didn't want to move to a small town, or they didn't build in the transaction cost. Some people resort to home equity release (lifetime) loans, which eat up their capital way too fast.

8. Not buying property. A mortgage-free home is a huge relief for retirees. A house still costs money to run, but rent is significantly more expensive.

9. Failing to review savings. Retirement, like everything else in life, requires planning and reflection if it is going to be a success.

10. Taking big risks with retirement savings. This is failing to diversify, but worse. It's plunging money into risky investments and businesses in the hope of making it big. This is sometimes popular with those who have left saving too late and think they can make up for lost time. It's what happened to many Blue Chip investors who didn't have enough saved and believed the patter that property investment was as safe as bricks and mortar.

11. Guessing, not planning. Jeff Matthews, senior financial adviser at Spicers Wealth Management, says most people don't know "their number". That's the lump sum required to provide the level of income they need to live. The average household expenditure in New Zealand is $52,540 a year, says Matthews. People think that is going to drop by a third when they retire, but it's not always the case. Another financial adviser, Robert Oddy of International Financial Planners, says people don't do budgets for their retirement. They just assume their expenses will drop. Even if they do budget, says Oddy, they often don't factor in one of them dying. Costs don't halve when someone dies. The NZ Super payments drop dramatically, however.

12. Planning to work until you drop: one way to salvage a lack of retirement savings is to continue working. Yet I've read that as many as two in five have to retire before they want to because of redundancy or disability as a result of illness or accident. Being forced to go on the invalid's benefit can be financially devastating. If they're under the age of 65 they will only be entitled to invalid's benefit at $256.19 a week for a single person or $426.98 for a couple. Even when the person qualifies for NZ Super, he or she may not be able to continue working as expected to top up a lack of savings.

13. Blowing the inheritance from Mum and Dad. It's okay to indulge a little, then invest the rest wisely. Beware of family members who may want a cut of the inheritance to solve their own problems or of snake oil salespeople who want people to invest the lot in dodgy ventures.

14. Failing to lock money away. "I don't want to put money in KiwiSaver because I can't access it." Anyone with this approach to retirement saving is their own worst enemy. Sooner or later there is a reason to spend that money.

15. Borrowing from yourself. It's too easy to see the equity building up in a mortgage and take some out to pay for living costs, buy a new kitchen, a new car and so on. While some people feel they're becoming wealthy as their house grows in value, if they're eating the mortgage or living it up with top-ups they can be sabotaging a comfortable retirement.

16. Being an amateur market analyst. There are some DIY investors who are as good as the professionals. There are many more, however, who think they are instant experts until the financial cycle flushes them out. They can be found day-trading in shares, dealing in derivatives, stockpiling precious metals or, until recently, borrowing to the hilt to buy far too many properties.

17. Confusing a husband with a retirement plan. Morris sees too many wives relying on their husband's retirement plan. "[We] often see wives completely leaving the finances to the husband then hubby dies early or they split up. The life cover plan may not have provided for the partner's retirement or there is no retirement plan at all."

18. Not letting go of the children's problems. The children's financial problems often hold parents back. The parents may invest in the children's business or go guarantor on the house and it all turns to custard.

19. Believing that there will always be universal NZ Super without means testing. Research by a number of organisations has shown that NZ Super is not financially sustainable as it is. Most likely the age at which we can line up at the collect window will rise, rather than means testing be introduced. Even so it's worth knowing how much of a lump sum the average person would need to replace New Zealand Superannuation. Matthews says that would be $450,000 for a couple and $280,000 for a single person living alone. Those amounts are before you start saving to top up NZ Super, which is a measly $27,913.60 for a couple or $18,143.84 for a single.

20. Spending it Lotto-style. The temptation is there to cash in investments at age 65 and blow the lot on a round-the-world trip, boat, bach or living it up in other ways. About a third of retirees who became eligible to draw their KiwiSaver on July 1 this year have withdrawn the lot. That is expected to rise to 50 per cent. We're living longer, which makes siphoning off retirement savings too rapidly even more of a risk. Those people who have reached the age of 65 have lived two years longer on average per decade for the past 50 years.

Of course, a good retirement isn't all about money. As Auckland Grey Power president Anne-Marie Coury says, the research shows that social isolation is the biggest problem faced by retired people, not financial deprivation.