When planning out our future, our life after retirement, we do our complete best to gather all the information that we can about what to do while sketching out our future financial plans. But what is equally important is to know what not to do when you are preparing yourself for life after retirement.
So, instead of letting all the technicalities of investment and retirement planning overwhelm you, get a head start and hit the ground running while planning your retirement, here are five biggest retirement blunders that people generally make, and ones which you should avoid at any cost.
1. Do Not Be Too Careful
Not very many people are comfortable with the idea of risk as far as their money is concerned, especially if the money in question is the one they are saving up for their old age. Due to this very understandable fear of losing one’s hard earned money, many start to cling on to their money and avoid any kind of investment altogether. Just, do not do that. Diversify your investments, and invest sensibly if you truly want to take full advantage of the bull market.
2. Decide What You Want your Post-Retirement Life To Be
To start saving for your life after retirement, you need to first have a clear idea about what you want it to be like. Do you want to take a world tour? Or maybe multiple but frequent trips abroad? Or do you want to buy property to your name? Figuring out your ideal post-retirement life is crucial to the process of retirement planning, and tools like pension calculator come in handy in such situations.
3. Account for Variations
The global market is changing on a daily basis, so it is absurd to believe that something that costs a hundred bucks today would still cost the same twenty or thirty years from now. Hence, account for inflation and economic variations while estimating your ideal amount of retirement savings. By accounting for market fluctuations during retirement planning, you not only live a comfortable life after you retire, but also stay ahead of rapidly rising prices, always.
4. Don’t Save Radical Changes For After Retirement
The important thing to know and understand here is that once you retire, you would not be having a steady cash flow, at least not like the one you do have while you are actively employed. Hence, if you want to bring out a radical change in your lifestyle—start new ventures, a business, or even a personal change that requires a large sum of money to bring about—it is always advised to do it right now. After retirement, you are well over sixty years of age, and having to struggle to accumulate money for something, however important, is neither clever nor entirely feasible.
Also, to ensure that you continue to live the same life you are living right now, chalk out a rough plan for the same while retirement planning itself. If you are a doer, a go-getter, buying a house in a tourist destination with only scenic beauty to offer is going to be great only for a short while. After that, it would only cause frustration to your inner Type a persona, so be careful with that, too.
5. Do Not Undermine Your Post Retirement Expenses
After you retire, your income may decrease, but your expenses (daily, monthly or annually) may not. This means that while your income is less, your expenditure is still on the rise. While some might say that your expenses decrease when you retire, it is not true for a large majority of the public. Hence, it is highly advised to use tools like pension calculator and estimate your future sources and amount of income, and plan accordingly. Apart from the income sources and amount, it is also necessary to understand your future expenses.
Sure, you would not require to spend money on daily commute to and from office, but that means you could use that time to travel to new and interesting places, go out with friends and family, explore in general—all of which require money, probably more than what your daily commute to and from work would have amounted to.