Five common mistakes people make while planning for retirement

1. Five common mistakes people make while planning for retirement

2. Retirement plans in India are usually made when a person is just a year or two short of retirement. • Financial planning for most people in our country is limited to their child’s education, their future business endeavours and their weddings. • Apart from them people generally save for healthcare.

3. Pension plans provided by employers are very often inadequate to meet the needs of a family, post retirement. • You may also have plans to travel, start-up your own venture or to move out of the city, to fund these plans you need early retirement planning.

4. When you start saving early, you can make proper financial decisions, also have a chance to choose more lucrative pension plans. • Retirement planning is not an easy task though, especially for someone who has no background in finance. • For those of you who are need of advice, here are five common mistakes that you should avoid while planning for retirement.

5. Not Considering Price Rise

6. An investment of say, 15 lacs could get you much more returns, 10 years ago then it can today. • Effective retirement planning takes into consideration factors like inflation. • What you think is a big amount today, may not seem as big ten or even five years from now. • Invest proper amounts after taking this factor into account.

7. Investing only in FDs

8. Fixed deposits are a great savings tool, but they are not the only one. • There are numerous other schemes and policies, such as ULIPs, Provident Funds and other endowment plans that can give you more returns than FDs.

9. Investing only in Property

10. Even though property is a lucrative investment, it can be a bit unstable. • Property also comes with additional cost of upkeep, maintenance and taxes. • Even though most of the time property only sees appreciation, there are chances of depreciation too. • We’re in no way saying that property is a bad investment, but when it comes to property investment as a pension plan, don’t put all your eggs in one basket.

11. Underestimating your Expenses

12. We often think that we will require much less disposable income post retirement. • Our expenses will go down and we will lead a simple life. • But that is not always the case. • Expenses like medical expenses, wedding expenses or business expenses can come up anytime and not taking that into account is another mistake.

13. Starting Late

14. Effective retirement planning begins early. • We know there are numerous plans and schemes that promise you huge returns in a short amount of time, but more often than not those are empty promises. • Start saving early so that you can have a comfortable life post retirement.

15. Thank You