Retirement planning is one task which cannot be done in silos. It is not just about planning the savings and investments but about taking everything all together and shaping your life around it once your routine gets busted. If you ignore other aspects of life, your fool-proof retirement planning will not go the way it should. Here are 4 mistakes that are a big no-no to your perfect retirement planning;
- Focusing Just on retirement
Retirement planning can be one of the biggest goals but not the only one. While you may be skeptical of the later years to be sailing smooth, there is a possibility you might be losing on other important aspects of life. Before retirement, there are a lot of phases which come that require equivalent attention and funds. while you go ahead in life, your family grows and so do responsibilities. You will need funds for your marriage, child’s education, home, child’s marriage and so on.
Do not neglect them over your retirement. Also, if you do not plan for these events now, your retirement will be jeopardized. Sooner or later you will have to work out on funds for things other than retirement and eventually lead you into spending a hefty chunk from your retirement savings.
Be versatile with your future planning and stay in alignment with your financial goals. Budget properly and stick to it or you may lose on one point or other.
- Ignoring the regular income
While we are still working, the regular income is not a concern. But once your working age comes to an end and you are nearing your retirement, regular incomes becomes a threat. Even if you have saved plenty of corpus for retirement, you cannot keep withdrawing money from your retirement corpus. The best option is to invest in an annuity option which will earn you a regular income. But there is one disadvantage with the annuity plan, it has a low growth profile and the returns from it are taxable. Since Annuity plan provides with guaranteed returns, it is okay to park about 20% of your money in an annuity just to ensure regular income in your later years.
SWP comes to your escape then. SWP is a systematic withdrawal plan which allows investors to plan a systematic withdrawal of their invested money. Rather than putting all or most of your money into annuity or savings, putting your money into SWP will ensure steady growth through the SIP way.
- Planning post-retirement
Planning for retirement is a never-ending process. Now that you have retired and entered this comparatively relaxing phase of your life, your calculation skills will now be put to test. Now that you have retired, you need to move very cautiously with your money. If you do not have an alternate source of income, it becomes even more important to preserve and grow your capital.
Either develop an alternate source of income or invest your money cautiously in a vehicle which grows your money while you have already retired.
- Letting retirement overtake you
This is the worst mistakes of all. Do not let retirement overpower you. Like all others, this is also a phase which needs to be accepted gracefully. A lot of people suffer from depression post-retirement. The main reason behind this is sitting back idle at home especially those who had an extremely busy routine. While you grow your wealth during your working years, it is very important to embrace your hobbies and talents during that time.
Now that you have retired, bring your hobbies into action and encash your talents. Maybe you are an excellent cook, you can start cookery classes or write your own cookbook or maybe you love gardening, you can do gardens for people. Introspect and find what you are best at. Develop your talent now so that it develops you later. There are a lot of companies who hire senior interns on time-limited projects, look for such opportunities and keep yourself busy.