Here’s a question every person who’s looking out for a smooth retirement should be asking themselves: “Are my steps in planning for retirement the right ones? or am I doing it wrong?”
Despite your best efforts, mistakes are still unavoidable. Unfortunately, if you’re not constantly keeping yourself updated, you might just find those mistakes when it’s already too late – when you’ve already retired and hoping to reap the possible benefits of your efforts to plan your retirement right.
Here are six ways through which you may be preparing for your retirement wrong.
Assuming that you’re going to spend less during retirement and planning around that
Don’t make the mistake that, just because you’ve left the corporate world and have settled all loans before your retirement, you’re going to spend less. Retirement comes at a ripe age, which means you’ll have to spend more on medical costs than anything else.
You’re not keeping yourself aware of fees in your investment
Most retirees invest in long-term financial instruments hoping to make an income as specified by the growth projections of their broker. However, these growths in investment also come with annual fees, which will affect the lump sum you receive when your investments mature. If you’re planning your lifestyle around the expected profits, you could be in for a shock when you receive the lump sum after fees.
Not planning to work after retirement
Retirement literally means leaving your main source of employment and striking it out on your own after several years of tenured service. However, it doesn’t mean you’re not going to work still. You still need a source of income after all, and employment comes with the perk of a steady income. The only difference here is that, after years of experience, you have a chance of being your own boss.
Putting your eggs in one basket
This is a phrase that means you are placing all your investment money into one vehicle. Any wise investor knows that it’s ideal to spread out your money into many different investments. This is one way of offsetting possible losses should one investment fold. It’s better to lose in one investment and gain in many others, instead of losing all your money in one single investment.
Not keeping abreast of possible taxes
Taxes are an inherent part of anything involving finances. It’s your job to keep yourself informed on possible taxes that you’ll have to pay when you finally retire and collect returns from your investments. For instance, knowing how much you’ll be receiving from your Social Security benefits every month as a retiree will give you a solid idea of how much money you’ll have as a monthly stipend.
Not planning for hobbies
If you’re not planning to pursue a hobby when you retire, then what are you retiring for? True, you need to work on something to earn an income but retirement is also the time for you to pursue those hobbies that you’ve neglected during your years as a tenured employee. Give yourself that chance!
You deserve the best for your retirement, so avoid these six mistakes at all costs!
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