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5 Mistakes You Should Avoid While Planning Retirement Research Team | Posted On Saturday, June 29,2019, 05:14 PM

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5 Mistakes You Should Avoid While Planning Retirement



1. Not Making a Budget:

Retirement Planning requires financial discipline. We often forget to include certain important points while accessing the retirement corpus. If you want to enjoy a great life, make a budget.

To enjoy a successful retirement, you need to access current lifestyle expenses and chalk up a budget, accordingly. For example, if you love to go to the movies or want to take vacations with your partner post-retirement, then you must also include this within your budget. Only planning minimum monthly expenses doesn’t help. You must plan wisely keeping current lifestyle in mind to enjoy a stress-free retirement.

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2. Not Counting Medical Expenses:

Senior citizens are prone to hospitalization and chronic ailments. Availing health insurance early in life; is of paramount importance. This helps remain confident and prepped for medical emergencies. Health insurance also comes with riders, which can be added to avail additional coverage. Health insurance generally comes with yearly premiums. Currently, plans are on for long-term health insurance plans. Opt for guaranteed renewability clause with health insurance plans.

See Also: Retirement Plans In India

3. Not Investing Based on Future Needs:

Many investors opt for a single investment, instead of a diversified investment portfolio. This can be due to lack of awareness or low-risk appetite. A single investment is risky as there is no diversification benefit. A single investment may not beat inflation.

Investing only in safe options like FD, PPF or NSC may not offer inflation-beating returns, whereas investing only in equities is risky as a major stock market crash may lead to heavy losses. To stay on a safer side, an investor must diversify investment options and mix traditional investment plans with new-age market-linked plans.

See Also: How to Plan for Retirement?

4. Not Considering Future Costs:

While making a retirement plan, consider other factors which will affect your monthly income, post-retirement. Certain factors like taxes, other sources of income, inflation, and your responsibilities post-retirement, may have an impact on your retirement plan. Consider these important points to make a reasonable retirement plan.

A retirement plan which seems great today; may not be sufficient in the future. Pay off all liabilities before retirement. Get rid of home loans and any other loans. Don’t spend your retirement money on children’s education. Avail an education loan for your children’s education.

See Also: Financial Plans For Retirement Benefits

5. Start Saving Too Late:

Ideally you must start investing for retirement as soon as you enter the professional world. But, most of us do not pay heed, until it’s too late. There is no good time to start retirement planning. The best time is, Right Now. At each life stage, you have important expenses. In the 30’s there’s home loans and other loans to repay, in your 40’s there’s children’s responsibilities (Education and Marriage), in your 50’s there’s clearing off pending loans and if you start retirement planning at this age, it will end in disaster.

See Also: Retirement Planning For A Secure Retirement

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