Why do you hustle every day at work? Many of you might build a nest-egg for the golden years of life and work extra every single day for a secure future. Your retirement should be the beginning of the golden years of your life, wherein you can reap the rewards of your active working years. If you don’t save adequately for your retirement, your retirement period can simply end up into the most stress-full period of your life.
Before you accumulate your retirement savings, let’s go through the top seven retirement mistakes, which can disrupt your financial well-being after retirement:
- Avoiding retirement planning
In India, the usual retirement period can be between 55-60 years. Although your retirement might seem far away currently, you should start your retirement planning as early as possible. Retirement should not be an impulsive decision. It should be done with a lot of thought and an advance amount of planning. A well-thought retirement plan can help you live a comfortable lifestyle in the long run.
- Focusing only on achieving your post-retirement goals
Many of you might either take retirement either to live peacefully at home or accomplish your post-retirement goals like pursuing an interesting hobby, traveling and so forth. While fulfilling your post-retirement goals can be essential, you should not forget the financial security of your family after your retirement. As the breadwinner of the family, identify the needs of your loved ones, consider your dreams, and plan your retirement accordingly.
- Choosing to retire too soon
Today, retirement might not be about the age you choose to retire anymore. However, choosing to retire at a young age without proper planning can drown you into a financial crisis. If you plan to retire at a young age, you should know how to retire early to ensure you have enough resources to maintain your current lifestyle even after your retirement.
- Availing only health insurance
As you grow older, the severity of diseases can be relatively higher as compared to young age. You might be prone to health conditions like kidney failure, cardiovascular diseases, and so forth. Although having a health insurance policy can be beneficial at this age, you should not depend on it. Many insurers might not cover specific health care conditions like dental care or eye care.
- Depending solely on your income
During your active working years, you would have accumulated funds to live a stress-free retirement period. However, you should not solely depend on your hard-earned savings after your retirement. You should purchase a pension plan to meet your routine and household expenses. A pension plan is a retirement plan, which offers regular retirement income to fulfill your financial requirements after your retirement.
- Dipping into the emergency fund
Due to the unpredictability of life, you should create an emergency fund to tackle any unannounced contingencies like medical emergency, loss of income, physical disability, and so forth. An emergency fund can be the additional earnings only specific to handle the eventualities of life. If you use the emergency fund to meet your goals like purchasing a new house or a car during retirement, you are more likely to risk your financial health when an emergency arises in the future.
- Investing in capital market rigorously
Investments can allow you to grow your corpus as well as earn interest in return. However, you should not risk your invested capital at an older age. As you grow older, you should avoid actively participating in the stock market. Since you might not be able to bear the market risks at an older age, you should invest in debt funds. Although debt funds might offer relatively low returns, it is less risky as compared to equity funds.
In a nutshell, retirement can be one of the most crucial milestones of your life. Seek professional help before you start your retirement journey. A financial expert can guide you through the entire process of retirement planning by avoiding any of the mistakes mentioned above.