After spending years at the desk, meeting deadlines, and pleasing our bosses, don’t we all dream of a stress-free and financially secured retirement life? The primary reason why we put in hours of hard work in the office is so that when it is all over, you can spend your post-retirement years with your loved ones, pursuing your unfulfilled dreams and hobbies. While some dread thinking about retirement and old age, it is essential that they keep a realistic mindset and plan for retirement. Retirement planning is as important as financial planning they are two different sides of the same coin. When it comes to prioritizing financial goals, retirement planning should be on the top of the list.
The last thing you want is to not have left with any savings by the time you retire. It would be embarrassing for you and your better half to become a liability for your children. You do not want to go knocking on the doors of estranged relatives for financial favors in vulnerable moments. Financial freedom is a must, especially during a time when your major source of income which is your monthly salary, will come to a standstill.
Let us take a look at some of the common mistakes to avoid when planning for retirement –
Not having an adequate retirement corpus
The biggest mistake that most investors make while retirement planning is that they fail to build a corpus that will suffice them for the coming years. Remember that when you are planning for retirement, you must make sure that you do not face any shortfalls at least for the next 20 years after retirement. You will only build an insufficient corpus if you do not plan for retirement properly. Investors do not realize the importance of retirement planning till they are near the age of retirement. By then it is too late as you cannot build a large corpus in a short period. You can use the retirement calculator to calculate the right amount necessary for building a solid corpus. This calculator can also help you determine how much your regular investments should be so that you can achieve the desired corpus in the stipulated period.
Not taking inflation into consideration
Another rookie mistake that investors make is not considering inflation. Inflation can be your biggest enemy when planning for the future. People fail to understand that money losses its value over time. For example, a liter of packaged mineral water costs Rs 20 today. A decade ago, the same product was available for half the price. Similarly, if you are thinking of buying a house after retirement and planning keeping in the mind the current real estate scenario, you won’t be able to purchases because, by that time, the prices would be twofold.
Failing to start early
The most flawed part about retirement planning is realizing its importance when it is too late. People do not want to accept the fact that they are going to get old at some point in time and to ignore this fact, they ignore retirement planning. This is not a good idea as to when you become old, you will have only a few years in hand and your monthly investments will make it unbearable for you to continue with your current lifestyle. Time gone cannot be brought back. Investors should make the most out of the opportunity and start investing in retirement savings funds when they are young so that they have more years in hand to compound their investments into a decent retirement corpus over the long haul.