Retirement planning is one of the most crucial financial step of our lives. Therefore, the stakes involved in planning our retirement are high. When it comes to retirement, you should make the right decision to ensure that your golden years are filled with independence, joy, and freedom. The main aspect here is to ensure that you plan your finances in such a way so that you can at least maintain the standard of living that you are maintaining currently. However, if you make a mistake with your retirement planning, it might lead to poverty, dependence, and penny pinching issues which would be difficult to deal with.

Before you start your retirement planning, let’s take a look at these top 10 mistakes that can take place while doing so:

1. Not saving enough for retirement

Although you strive hard to earn money, you might end up saving too little to live a stress-free retirement. For instance, if you choose today’s wants over tomorrow’s needs, you will not be able to save enough for your retirement. Therefore, you should keep aside approximately 25% of your gross income for your retirement. As your career advances further, you can increase the percentage, which will eventually help to add up more amount substantially.

2. Not buying a retirement investment plan

One of the biggest mistakes you can make is not purchasing a pension plan. A pension plan is essential irrespective of the fact that you have savings. With a pension plan, you can ensure an uninterrupted financial flow to fulfill your post-retirement goals like travelling, pursuing new hobbies, and so forth.

3. Not starting early

Not starting to save early is another common mistake that you might make. Initially, when you start earning, you spend money on providing your dependents and taking care of your immediate needs. However, it is imperative to start saving for your retirement after your first salary due to the benefits of the power of compounding. When you start at a younger age, you have enough time in your hand to build a larger corpus. And with compounding, you can receive more returns, which will eventually add up to your funds.

4. Not clearing your past liabilities

We understand that you might require specific loans to fulfill your financial goals. For instance, you might have taken a car loan or a home loan. However, see to it that you pay off all your debts so that you have no financial burden during retirement.

5. Not opting for high risk instruments

When you’re younger, you usually don’t have to shoulder major responsibilities. Hence, you can afford to take more risks. Since your risk appetite is high, you should invest in equity funds at an early stage of life. Investment in an equity fund at a younger age will ensure you have higher returns in your hands. However, as you reach your retirement age, shift to debt funds since it involves low risk.

6. Not reading the policy document

When you purchase any insurance policy or an investment plan, you should ensure that you read the fine print of the plan/policy carefully. Go through the terms and conditions, and essential information like the lock-in period, risk level, expected returns, and so forth without fail. Don’t sign on any document without reading its fine print in detail.

7. Not taking professional help

Investments are a risky business. Therefore, don’t solely depend on your friend’s or relative’s advice. Speak to a financial expert as they will understand your investment goals and help you invest in a plan based on your goals.

8. Not having an emergency fund

During a financial emergency, many people usually opt to liquidate investments from their pension plan. Since retirement savings are required for the future, you might end up utilizing it to tackle your current financial setback. However, dipping into your retirement savings will lessen the years of living a stress-free life during retirement. Therefore, build an emergency fund for such circumstances and stay away from your retirement savings.

9. Not planning for health costs

As you grow older, the chances of falling sick are higher. Therefore, it is imperative to plan for your medical health in advance. Purchasing health insurance is an excellent way to deal with medical expenses in times of need. Moreover, it reduces your out-of-pocket expenditure by making it easier to deal with the expensive hospital bills.

10. Not considering short-term goals

While retirement is a major concern, you should not ignore your short-term goals while planning for retirement. While saving for your retirement and investing in a retirement policy, don’t sacrifice on your daily expenses or your personal needs.

Conclusion:

To sum up, no matter where you are on the retirement continuum, you will tend to make mistakes in that whole process. To avoid problems, seek professional help to stay on track and get your early retirement life goals done