Financial Mistakes to Avoid in Your Forties, Fifties, and Sixties

Financial Mistakes to Avoid in Your Forties, Fifties, and Sixties

Joseph Darby

Your forties, fifties, and sixties are a period ripe with opportunities to forge a prosperous future. While past financial decisions may have laid a foundation, the focus now shifts to the positive steps you can take in the present and beyond.

Backed by a wealth of insights and data, let’s delve into common financial missteps during this phase of life, with the aim of helping you avoid these potential pitfalls, and instead build an optimistic future.

Or, if you don’t fit into this age bracket, see the corresponding article: Financial mistakes to avoid in your twenties and thirties

1. Missed Opportunity

For most of this phase of life, the potential exists to miss opportunities. People can be so focused on day-to-day trivialities they forget to take a step back and evaluate the big picture.

What exactly these missed opportunities are will depend on your personal situation, what you aim to achieve, and how much might be put at stake. By way of example, the missed opportunities might include:

  • A 50-year-old couple not realising they have enough equity in their home to leverage and buy an investment property.
  • A 45-year-old whose industry and job is being disrupted by technology, who doesn’t change career paths into another field with much-improved prospects.
  • A freshly mortgage-free couple who have a newfound regular cash surplus, and waste it on unnecessary spending. As the couple is already accustomed to living without this extra cash, it could be invested towards something meaningful, such as early retirement. 
  • A 40-year-old with no dependents or debt not seizing an opportunity to launch their own business.
  • A 60-year-old couple who don’t realise they have enough of a nest egg to comfortably retire, so keep working for several more years.

2. Failure to Plan

Failure to participate in any kind of financial or retirement planning is a sure-fire way to struggle later in life. Early planning is like planting seeds for a strong financial future. It's the difference between sipping cocktails on the beach by age 65 or working well into your seventies. 

At this phase of life, the simple fix to secure your retirement is to establish a comprehensive financial plan, then stick to it! Early planning and smart investment choices are not just financial strategies; they form the everyday building blocks for a retirement that aligns with your dreams and aspirations.

You can develop your own financial plan or have a professional like the team here at Become Wealth do it for you. To get started with our guidance, simply get in touch.

3. Supporting Adult Children

Most parents are all too happy to help their children in some way or another. However, as those children turn into adults, wise parents will get their birds to leave the nest and develop financial independence — rather than hang around eating mum’s cooking.

Nowadays, it can be normal for those in their late twenties to still live in the parental home and live from payday to payday. According to the latest data from Stats NZ, about a quarter of 18 to 34-year-olds in New Zealand live with family.

While it's reasonable for adult children to save on daily expenses and work toward self-sufficiency, the reality is that many take advantage of this situation to indulge in discretionary spending, skipping financial responsibility. This not only places unnecessary strain on family relations, but it can also be a contributing factor to a delayed retirement for many parents.

Teaching children about financial matters early in life, then managing expectations as they become young adults, will help minimise the pressure on parents. Some parents with adult children living at home may also benefit from practicing a little ‘tough love’ and having open discussions about when it’s time for the adult children to stand on their own two feet.

4. 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 27,000 people are diagnosed with cancer every year.

As you age your health declines, and so your risk level goes up. Therefore, it’s time you consider appropriate levels of personal insurance to protect you and those around you from the worst life may throw at you.  

Health Insurance

Unfortunately, New Zealand’s healthcare system has been described as “in crisis” with massive staffing issues. Health insurance serves as a safety net covering medical expenses and treatments, due to illness. Health insurance should ensure you get the best treatment in a timely manner.

Income Protection Insurance

Income protection insurance safeguards against a wide range of circumstances which might prevent you from working. This includes protection against illnesses, which ACC doesn’t cover. Generally, you’ll continue to receive up to 75 per cent of your regular income even though you can’t work.

Safeguarding your income is a critical element of financial planning. With a suitable level of coverage, you can be assured that your family, lifestyle, financial goals, and necessities are protected.

5. Lack of Diversification

Diversification is the first principle of investing, though a common issue at this phase of life is people who might put most of their wealth into one type of asset (“asset class”). This means they’re at risk of that one asset class experiencing a downturn or even being altogether toppled – conceivably due to technological advancements.

In New Zealand, this risk is most obvious among those who hold most of their wealth in residential property or a small or medium-sized business. Residential real estate investment is resilient, though can still be exposed to regional or national downturns, and natural disasters, especially if all the properties are in the same region. Small and mid-sized businesses are probably the most vulnerable, especially in the modern climate, where rapid advances in technology mean whole industries can be upended with little notice. Technology may also make it easier for a well-heeled international competitor to enter New Zealand. Even well-established companies have been put out of business by new technology: Kodak, Video Ezy, and Polaroid are names that come to mind, while others which faded into oblivion include Nokia, Blackberry, and Xerox. Technological disruption aside, companies still routinely fail for any number of reasons. Think about the fate of Pumpkin Patch, Dick Smith, Silicon Valley Bank, Credit Suisse, and the raft of New Zealand finance company failures of the Global Financial Crisis.

Generally, as you age, diversification becomes increasingly important to protect what you’ve worked so hard to build.

Embracing diversification is not just a strategy for better returns but a safeguard if the economy, parts of the economy, or even if an individual asset (such as a single property or business) start going wrong.


A issue related to diversification can be illiquidity, especially through this phase of life.

Illiquidity refers to assets which cannot easily or readily be sold or exchanged for cash. Illiquidity is the opposite of liquidity. Investments such as property, small businesses, and even KiwiSaver Schemes are all illiquid because you cannot easily access what you have invested in them.

Consider this hypothetical situation: by age 55 you may have worked smart and hard for many years and be quite wealthy. But, if your only major assets are the home you live in and a sizeable KiwiSaver Scheme investment, then you may be stuck working for many more years until you reach the age when you can access your KiwiSaver investment. Why? Illiquidity, strict withdrawal criteria apply to KiwiSaver investments which means in most cases people can only access them at age 65, plus it’s not easy or straightforward to sell your own home; you will still need somewhere to live.

The solution is to diversify by investing into liquid investments too, perhaps an accessible managed fund, a share portfolio, or something similar.

6. Holding Savings in a Bank Account and/or Term Deposits Without Good Reason

Putting your cash in a term deposit might appeal when interest rates are no longer at rock bottom, like they were during the pandemic era. Term deposits offer the holder a steady stream of interest payments for the duration of the term. Our banks are among the most well-regulated worldwide, which means term deposits held with mainstream New Zealand banks are secure and stable.

However, despite their relative safety and the appeal of steady income, there are three key drawbacks with term deposits:

  1. Illiquidity. Term deposits are illiquid, you cannot access them without some sort of penalty, usually a fee or forfeiting all interest.
  2. Tax inefficiency. The interest on term deposits is taxed at levels which can be as high as 39%, depending on what you earn. This tax quickly erodes your return.
  3. Inflation. This is the real killer. Even though the headline interest rates on offer with term deposits may appeal, the returns on term deposits nearly always lag below inflation. Because term deposits are so safe, they offer a low return. The total return gets even less appealing after the return is taxed. Inflation and tax combine to mean that you’re usually losing money in real terms by holding funds in term deposits.

Instead of term deposits, explore other investment choices to meet your mid- to long-term needs. There are plenty out there to choose from, though for the sake of illustration, let’s briefly examine KiwiSaver Scheme growth funds (noting similar accessible funds also exist, where your money isn’t locked in until age 65). At last count, the average KiwiSaver Scheme growth fund returned 7.6% per year for 10 years, while the best performing growth funds over this period returned over 10% each year. This is even more impressive when you consider the turmoil of the last decade, including a global pandemic, recession, natural disasters, wars, and so on! These funds are structured in a tax efficient way, too, so you’ll typically pay much less tax on that than on the interest received on a term deposit.

7. Investing Without Advice

This may sound like a shameless plug for our own services but hear us out.

As you become wealthier, the stakes get higher. The do it yourself (“DIY”) approach Kiwis are so fond of in many areas of life might appeal if you’re 25 or 30 years old and you’ve got a few spare dollars to toy with via an online share trading platform. But, when you’re a little older, and you’re making life-defining choices, like whether you should buy an investment property, invest your life savings, or start a retirement nest egg to run alongside your KiwiSaver Scheme, the DIY approach just doesn’t cut it. The sums are too large, there are too many choices, there are too many scams to avoid, and the risks of getting it wrong are too great.

The investment world has also got more complicated.

Listening to a good financial adviser, including the team here at Become Wealth, is the best way to ensure you get what you want from your financial life. To book a complimentary initial consultation, simply get in touch as our team is standing by to assist.

The Bottom Line: Financial Mistakes to Avoid in Your Forties, Fifties, and Sixties

In this critical phase of life, the decisions you make not only shape your children's future but will also significantly influence your retirement. By steering clear of the listed financial pitfalls, you pave the way for a more secure and enjoyable retirement and can even secure a legacy that extends beyond your lifetime. Make informed choices to safeguard your financial well-being and leave a positive impact for generations to come.

If you’d like a free, confidential, and no-obligation chat about anything above or about any other financial matters, then it’d be our pleasure to assist you. Book an initial consultation.

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