4 Mistakes you should avoid while planning Retirement
What if someone asked you how much your monthly expense would be after you retire, would you have a ready answer? If you’re several years away from that momentous date, it’s quite likely that you won’t have a clear response.
Living a peaceful and financially-secured retirement life should be one of the most important financial goals for each one of us. However, this requires strong and disciplined financial planning for a significant period of time to build an adequate retirement corpus.
These are the common mistakes you can avoid while you plan for your retirement
- Ignoring Inflation: causes the cost of everything from milk and bread to healthcare and entertainment to rise every year. If the prices are estimated to increase consistently for the next 20-30 years, clearly, your monthly spend would be much higher than it is today.
- Not starting early: Many individuals start planning for their retirement only when they reach their 40s, as it finally dawns on them that they are not too far from retiring. At this stage, since they have little time to create a corpus that should take care of them for at least 2 decades of retirement, they need to make big investments regularly. This is usually difficult due to the financial responsibilities people generally have in their 40s, like paying off a home loan, planning for their child’s higher education and marriage etc.
- Insufficient health coverage: Medical expenses tend to gradually increase as a person grows old. With the ever-increasing medical costs, it becomes vital to ensure that you have enough health cover that can take care of various unexpected medical expenses at old age. If you fail to procure an adequate health cover for your post-retirement phase, you are more likely to end up using a major chunk of your retirement corpus for unforeseen medical costs. Do not remain dependent on the health cover or group health policies provided by your employer as these are active only till the time you are employed with them.
- Not reviewing your retirement plan periodically: Formation of a retirement plan isn’t of any use if it’s not implemented and reviewed properly. It should not be taken as a onetime activity as it requires periodic reviews. Do a regular asset allocation and portfolio review your Advisor which my require to alter your investment strategy.
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