Imagine a time where you have no more deadlines to meet, no more work pressure, no more reporting to the demanding boss, and the joys of spending idyllic days. Yes, you guessed it right, we are talking about the golden era of one’s life – the retirement period. You only retire once and you should be able to do it without facing a cash crunch successfully. This article will cover top 4 mistakes that you must avoid as an investor while retirement planning.
MISTAKES TO AVOID WHILE RETIREMENT PLANNING
- Aiming a baseless retirement corpus
Choosing a retirement corpus figure is the first step of retirement planning. Thus, choosing the right figure is as important as having a retirement plan in itself. There are several mistakes individuals tend to make while choosing the retirement corpus:
- Selecting a corpus based on the current monthly expense
- Selecting a corpus according to annual income
- Picking a retirement corpus on the advice of a retiree
- Selecting a retirement corpus as per an online calculator
- Choosing a big retirement fund figure for “just in case” scenario
- Picking a retirement figure using DIY guidelines
- Start saving too late
Irrespective of the fact whether you plan to retire early or late, you have to start investing early to build a sizeable retirement corpus. A good sizeable retirement corpus is built with the help of the power of compounding that works best in your favour when you invest early.Whether you buy a ULIP retirement plan or a term insurance plan, the premiums tend to increase with age. Only when you start early, you can purchase more fund units or NAVs at a lower premium and thus maximise your returns.
- Underestimating future costs
To make life a lot easier after retirement, it is advisable for you to make a list of all the responsibilities that you would have to take care of after you retire. It would include anything and everything from – dependent adult child (due to disability), moving costs if you are planning to shift etc. Calculating possible risks and being prepared well in advance will help you plan your retirement budget more effectively.
- Not planning for medical expenses
With old age comes a range of medical conditions and the treatment costs for these ailments are quiet high that could leave your pockets heavy. Especially if you have a family history of ailments like diabetes, cancer, and hypertension this could increase your risk for these disorders further. To get though such situations it is important for you to have a health insurance plan with adequate features that will help you cover the treatment costs for these conditions.
Now that you have understood the importance of retirement planning, get on board and start your retirement planning without wasting any time. You can also consult a financial advisor to help you with your journey of retirement planning. Happy investing!