Common Retirement Investing Pitfalls (and How to Think About Avoiding Them)

Seven common pitfalls

These are patterns observed across the industry and reported by independent regulators such as ASIC. They are general observations, not personal advice.

Spotting scams

Common warning signs include: pressure to act fast, promises of guaranteed or unusually high returns, requests to send money to personal accounts, claims of inside knowledge, and offers that mimic well-known brands. Moneysmart maintains an up-to-date Scam Smart hub.

If you suspect a scam, stop communication, do not transfer funds, and report it to Scamwatch and your bank.

Building a calmer plan

A written plan helps. It doesn't need to be complicated — a one-page summary of your goals, income sources, fees, and Age Pension situation, reviewed annually, is often enough. Our list of questions to ask before investing can be useful when preparing for a review.

If you'd like a plain-English overview to start with, you can request your information pack.

Why these patterns are so common

Most of these pitfalls are not failures of intelligence — they're features of how human beings respond to uncertainty. Decades of research into investor behaviour show that losses tend to feel roughly twice as painful as equivalent gains feel pleasant. That asymmetry helps explain why people often sell after a fall (to stop the pain) and chase performance after a rise (to capture the gain). Both reactions, repeated over a long retirement, can be expensive.

Recency bias is another factor. Whatever has happened recently in markets or in the news tends to feel like the most likely thing to happen next. After a strong year, growth assets feel safe; after a fall, they feel reckless. A written plan helps because it commits you, in calmer moments, to a set of rules you can fall back on when markets are noisy.

None of this means you need to be a behavioural finance expert. It does mean that the structure around your decisions — a written plan, an annual review, a second opinion before any large change — often matters more than any single investment choice.

Building habits that protect you over time

A few simple habits tend to reduce the chance of falling into the most common patterns. First, separate decisions from headlines: give yourself at least a week between hearing about an idea and acting on it. Second, write down the reason for any change before you make it — if you can't explain it in a sentence, that's a signal to pause. Third, keep a running list of fees you actually pay, in dollars, not just percentages, so the cost stays visible.

Schedule a calm, unhurried annual review — ideally at the same time each year, away from end-of-financial-year noise. Use the same one-page summary each time, so changes are easy to spot. Many people find it useful to share that page with a partner, an adult child, or a trusted friend, so someone else also understands the plan.

Finally, treat unsolicited offers with consistent caution, regardless of who they appear to come from. Scam techniques evolve, but the underlying pattern — pressure, urgency, secrecy, unusual payment methods — stays much the same. Moneysmart keeps a current list of warning signs.

When to bring in a second opinion

A second opinion isn't only for when something looks wrong. It is also useful before any decision that is large, hard to reverse, or unfamiliar — for example, consolidating super funds, starting or stopping a pension, making a downsizer contribution, or committing to an annuity. Asking a second licensed professional to look at the same recommendation often surfaces questions that weren't obvious the first time.

Free options can play a role here too. The Services Australia Financial Information Service (FIS) can explain how Age Pension rules apply in general terms, and your super fund's general-advice helpline can usually explain product features without a personal recommendation. Used together with paid personal advice, they make it easier to keep your plan deliberate rather than reactive.