Any endeavour that lasts as long as retirement planning does—20 to 40 years—faces the risk of weakening and reduction, no matter how confident you were when you first ventured into it. Retirement planning needs regular checks and balances to ensure your corpus is there for you when you need it most; that is, when your salary has stopped due to retirement.
To retire into a rich and independent second innings full of foreign travel and splurging on grandchildren, keep these 5 DON’Ts in mind when it comes to your retirement.
DON’T delay Retirement Planning
Research suggests that in India only 3 out of 10 people save regularly for their retirement. The rest delay it, thinking that they have a lot of time left or they will start investing when their salary increases. This is incorrect thinking. Delaying will directly result in you losing the benefits of saving early. Let’s see an example.
When 30-year-old Kishore invests Rs 3,000 in a retirement plan for 30 years, he receives a pay-out of Rs 44 lakhs. However, when 35-year-old Akshay invests Rs 3,000 in a retirement plan for 25 years, he receives a pay-out of only Rs 28 lakhs. This is a difference of Rs 16 lakhs because of starting merely 5 years later.
DON’T use funds meant for Retirement
One of the biggest mistakes of young or working Indians is that they start using their retirement funds like EPF, PPF, and FD for their emergency requirements or to fulfil their daily needs. Using up your retirement savings thinking you will fill it up later means digging your own grave during retirement.
DON’T save without a goal
Retirement planning is a goal-oriented exercise. Having an idea about how much you will spend every year in your retirement years will help you understand how much you need to invest and where you need to invest, keeping in mind factors like inflation, age, income, expenses, and financial dependencies on you.
DON’T underestimate growing medical expenses
This is again a common misconception in Indians. To fulfil today’s needs, we are ready to compromise on our future needs. Even if you have good health, you cannot avoid age-related health risks. Health emergencies can wash away all your finances, especially in your old age. Despite this, many people fail to buy adequate health insurance cover, which will protect them from rising medical costs in the present and especially the future.
NEVER rely solely on your children to fulfil your retirement needs
Parents being dependent on their children is a common scenario in almost every Indian household. As the child starts earning, parents start relying on their income. This is a serious and common mistake made by many. By not planning for your retirement now, you will financially and emotionally burden your children in the future.
It’s never too late to make things right! Fix your retirement planning mistakes NOW.
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