These retirement mistakes can cost you dearly

• Follow

Retirement is the period when you no longer have to worry about employment and can spend your life the way you wish. You can travel, follow your hobbies and goals, and even relocate away from your home to spend quality time with your family in the country. However, this can all go up in smoke if things are not planned properly.

Retirement as a period is defined by expenses associated with meeting one’s responsibilities and pursuing one’s aspirations. Therefore, to fully enjoy your retirement and complete your duties, it is critical to begin preparing your retirement funds early and to avoid typical retirement mistakes such as the ones described below:

No savings plan

Retirement planning is a long-term endeavour, which is why having a plan in place is critical. You should begin by estimating your monthly financial needs after retirement, taking into account the size of your family, the number of dependents you are expected to have, and the expenses associated with each person, including yourself. An annuity plan is one such financial product that is tailored to your post-retirement financial needs.

Excluding healthcare cost

Retirement is the age when major illnesses and health problems are most prevalent. As you age, your risk of developing severe illnesses increases, as do your healthcare-related expenses. Even these necessary expenses can significantly deplete your funds. As a result, insurance becomes a need at this age.

Making premature withdrawals is a common mistake

Making premature withdrawals not only depletes your funds but also raises your tax liability. Untimely withdrawals from your retirement plan deplete your retirement savings. Such withdrawals deplete your retirement funds over time. A better idea would be to time your investments in such a way that one of them matures when you reach the age of 40. In this manner, you’ll have a substantial amount of money coming your way just in time to cover essential expenses such as purchasing a property. As such, it’s critical to plan for each milestone between now and retirement to avoid diluting your profits.

Too much debt

Carrying debt into retirement can be tough to handle when there is no source of income and a restricted amount of funds. While most people plan for loan repayment using their usual sources of income, they must prepare for loan payback in the unfortunate event of their absence.

Not starting early

The optimal time to begin saving is immediately upon employment. If you start working at the age of 21-24 and retire at 60, you will have another 35-40 years till retirement. During your retirement years, savings and investment returns become your sole source of income. As a result, the earlier you begin, the larger pool you can build by the time you retire.

Additionally, arranging for early retirement allows for the potential of early retirement. Indians are becoming more aware of this aspect and are planning for retirement earlier than prior generations.