5 Retirement Plan Blunders and How to Correct Them
Not planning at all: It is not advisable to adapt the devil-may-care attitude when it comes to retirement. Once you retire, you may have little or no sources of income and you may need to rely on pensions and savings. Start planning as soon as you start working to continue enjoying the financial freedom that you have always deserved.
Not taking advantage of your employer’s retirement schemes: Most employers have a retirement plan for all their employees. They help you save for your golden years. Make sure you invest at least as much as your employer does in your retirement plan. This way, you are saving double the amount while spending only half of it.
Cashing out on your retirement plan: You should never cash out on your retirement plan early. Not only do you have to pay the early cashing out fee but you will also have to pay taxes on this amount. In foresight, you might also have to put your retirement life in jeopardy. It is also not advisable to take a loan against your retirement funds.
Putting all your eggs into one basket: Investing in Mutual Funds and FDs is one of the most common ways to start saving up for retirement. However, if you do not diversify your investment portfolio, you end up with a higher risk factor on your retirement plan and thus, lose all your money should the stock or bond go sour.
Underestimating your retirement: It is also very common to neglect variables like inflation rates, taxes, health factors, and family emergencies while estimating the amount of money you will need to save for your retirement. The most efficient way to avoid making this mistake is to over-estimate your monetary needs to enjoy retirement. By over-estimating, you take into account all factors that you cannot predict.
A retirement plan is an important investment towards a secure future. Follow healthy financial habits to ensure that you live your retirement life happily-ever-after without being dependent on anyone.
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