3 things you shouldn’t ignore during retirement planning
Many people generally start earning when they are in their 20s. When you’re young, you usually focus on accomplishing your life goals, dreams and building a formidable career for yourself. While you’re so keen on pursuing your aspirations, retirement planning might be the last thing on your mind. However, the right time for retirement planning is usually after you receive your first paycheck so that you can leverage the advantage of staying invested for a long term to be able to earn maximum returns from the investments made.
Retirement planning is no longer just about saving money for a stress-free future. When it comes to planning for the golden years of your life (retirement), you should smartly utilize your savings as well as investment. Moreover, you should align your investment with your future financial and retirement goals. If you wish to maintain your current standard of living even after retirement, your retirement planning should be done in a comprehensive manner.
While planning for retirement, there are times when you might go wrong. These mistakes could derail your retirement planning process. Some of these are related to your financial goals and working after retirement. Before you plan for it, let’s begin by understanding the top three mistakes you should avoid:
- Don’t ignore other goals
While retirement planning is crucial, it is also essential that you do not avoid your other long-term financial goals. You might have other expenses like a child’s education, buying a new house, planning for a wedding, and so forth. If you don’t have a proper planning to achieve these goals, there are chances that you might end up utilizing money from your savings such as fixed deposits, etc. In worst case scenario, many people even use money from their Employee Provident Fund (EPF) to buy a new home.
- Consider your medical expenses
As you grow older, you’ll be prone to more and more diseases. In simple terms, the chances of falling sick are high. Therefore, you should keep your medical expenses in mind while planning for retirement. Having said that, you should purchase health insurance, which is suitable for you and your entire family during medical emergencies. Having health insurance will allow you to save a lot of medical bills and invoices.
- Create an emergency fund
Everybody should have an emergency fund. An emergency fund should have money, which is proportionate to nine months to one-year household expenses. The emergency fund that you build will come in handy if there is any unannounced medical emergency. If you start building an emergency corpus immediately after your first salary, you’ll have more time in your hand to create a bigger corpus. While developing an emergency fund, keep the inflation rate in mind and calculate the amount of money you will require to maintain your standard of living.
Conclusion:
Today, retirement might seem far away. While you may assume that you’re in no rush to retire soon, you will require accurate retirement planning before taking the big step. Retirement planning should be done in advance with the help of a right pension plan, which will help you to live the life you desire after your retirement.
A pension plan is fundamental to ensure uninterrupted financial support, which will allow you to achieve your post-retirement goals like travelling, pursuing interesting hobbies, and so forth. Whether you wish to accomplish your retirement goals or wish to live a relaxed life, a pension plan is an excellent way to do what you wish for. Moreover, it offers a host of retirement benefits, which will offer a steady income to you and your spouse.
