I often get asked, “Scott, what is your best single piece of advice?” Typically, I will respond that sometimes the best move you can make is to limit making bad decisions. Financial planning mistakes made now may sabotage your retirement dreams later. Poor financial habits such as overspending, lack of planning and bad risk management will increase the probability you will outlive your money.

Market performance, economic cycles and unplanned events are largely out of our control. However, there are some things we can control, and that starts with making the best decisions we can to increase our chances of success and mitigate risk. Here are six mistakes investors should avoid:

1. Not having a plan
Not having a financial plan means financial decisions are random and tend to be made without much thought as to how they will fit in the overall strategy. While living for the moment and making decisions haphazardly may feel good, a lifetime of doing so often results in insufficient savings and an overleveraged lifestyle.

You can start by setting small goals such as saving 5% of your income each month and then gradually working up to 10% - 15% each month, when you can afford it, in order to create a sufficient pool of wealth to fund retirement. The wise investor structures her savings as automatic monthly withdrawals from her bank account, or off her paycheque. This way the savings become a way of life, just like a mortgage or car payment. There is no longer any conscious thought required – it is automatic.

2. Never getting a second opinion on your retirement savings strategy
Here is an example: many clients follow the conventional wisdom of maximizing their RRSPs. But is this always the best plan for everyone? Depending upon an investor’s age, income, time horizon, retirement objectives and various other factors, an investor may be better off investing in a TFSA and/or within their corporation rather than an RRSP. It’s essential to look at your entire financial picture and determine the best course of action given your particular state of affairs.

3. Sacrificing retirement to help the kids
Make saving for retirement your top personal finance priority, even putting it ahead of saving for your children's university education. This may seem selfish, but is actually a sound financial strategy. University can usually be paid for with student loans or other types of financial aid if required, but you're completely out of luck if you reach your golden years without enough savings. Take care of yourself first so you will be in a better position to help your kids financially later. The key here is balance - if you can do both, even better, but remember, one of the best gifts you can give your kids is not to become dependent on them in the future.

4. Refusing to cut back
Many advisors encourage couples at, or approaching, retirement to reduce their spending and boost their savings. However, most couples don’t feel the urgency. During those critical saving years, many tough choices may have to be made in choosing between “needs” and “wants” when deciding where to allocate any available cash flow. Can you put off that new car a year or two to make extra payments on the mortgage or contributions to your retirement plan? Sometimes the right decisions are the tough ones. By not making changes in their lifestyle now, retirees will likely find it more difficult to scale back their spending later when they have lower income and have no choice.

5. Counting too much on government benefits
Often people are surprised when they find out exactly what government programs will pay them in retirement. For example, a quick visit to the Revenue Canada website shows the average Canada Pension Plan (CPP) benefit paid out in 2017 was $ 641.63 per month and the average Old Age Security (OAS) payment was $586.66. That means the average retiree today is receiving just over $14,700 per year (these numbers will be different for a couple). Could you retire today and live within those means? If not, you need to consider additional savings to bring your expected income in retirement up to the level you feel you will need to live comfortably.

6. Thinking you will live forever
Too many couples’ retirement dreams fall apart when a spouse dies unexpectedly. A friend of mine was forced to sell the family home and make significant changes to the family’s lifestyle because the family was unprepared for her husband’s sudden death. While you cannot avoid the emotional nightmare of losing a loved one, there are things you can do to lessen the financial and administrative nightmare. Having proper life and disability insurance coverage in place, having updated wills and organized financial information is critical so that both spouses are informed and ready to make financial decisions in the event one passes away.

-Scott Lewis, Vice President