Seven mistakes that can ruin your retirement planning and goals -
Seven mistakes that can ruin your retirement planning and goals
Posted 08 Feb 2021 12:48 PM


Seven mistakes that can ruin your retirement planning and goals


A person has to plan for various forthcoming requirements, retirement is one of them. To fulfill the basic necessities such as buying a car, purchasing a house, buying a vehicle or investing for a specific purpose requires a definitive and time-bound plan. Retirement planning involves multiple factors such as the quantum of money invested, tenure of investment, and the selected asset class for the purpose of long-term wealth building. While planning for retirement, most people often commit serious blunders which as a result hampers the desired objective. The hindrance between the path may arise due to a number of reasons as all the market tradable securities get affected by a bunch of factors ranging from internal governance issues to existing government policies with regard to a specific industry and upcoming possible variations in them.

1. Not saving for your retirement at all
Often people donít end up saving for their retirement, assuming that when the time comes, employer benefits like PPF and insurance will be enough. However, they will not cover all your retirement needs. You need to be proactive and plan for your own retirement. Even saving a small portion of your income adds up and contributes to your retirement corpus.

2. Saving without a Plan
One of the biggest investment mistakes is saving without an investment plan. Earmark retirement as a goal separate from your other financial goals. Work with a financial advisor who will craft a goal-based plan which will help you live comfortably now and in the future.

3. Starting to save too late
Delaying saving for your retirement is another common mistake. We spend the first few years providing for dependents and taking care of our immediate needs. However, it is imperative to start saving for your retirement as early as your first job to ensure the returns are maximized. The compounding power of your investments will help you retire with a comfortable corpus.

4. Living burdened with debt
Being in debt when there is no steady income is a serious concern. Live within your means and take loans for basic necessities such as a home loan. Ensure that your EMIs are structured in a manner that you pay off your loans and be debt-free before you retire.

5. Investing in Debt at a younger age
When you are younger, you can afford to take on more risk. It is advisable to invest more in equity than debt at the start of your career and progressively move to debt as you near retirement. Investing in debt at a younger age would imply several interest payments from the get-go, without having a profitable investment build-up.

6. Not understanding the fine print
Tempted by high returns and capital appreciation, we forget to read the fine print and miss out on important information. Ask your financial planner to explain the details of the product, such as the lock-in period, risk levels, expected returns, etc. to you before you make a decision to invest.

7. Dipping into your retirement corpus
When in need of cash, many opt to liquidate investments from their retirement plan. The idea being that this money is not required now and, therefore, can be easily replaced before the hour of need. This myopic approach will short change you in your later years. Avoid touching your retirement fund unless absolutely necessary.

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