Mistakes you should avoid while planning for retirement
IGNORING OTHER GOALS
Along with Retirement Planning, one should also plan for any pending expenses such as kid’s higher education, wedding, etc.
If you don’t plan for other critical goals, you may end up dipping into your retirement corpus to meet them. This diversion of the retirement fund is proving to be a big worry.
Besides kid’s education, people tend to withdraw money from their EPF to buy a house, for child’s marriage, medical emergencies, etc., leaving a very small corpus to meet retirement needs.
NOT PLANNING FOR REGULAR INCOME
Generating regular Income is essential to securing one’s retirement. Gradually withdrawing money from the accumulated corpus may not be the most suitable option.
Investing in an annuity can help you earn a regular income. But their annual return is low—around 6.5%—and they are also taxable, one can’t fully depend on it.
So, it makes sense to park a small portion in an annuity to have guaranteed income and the rest in regular interest bonds or mutual funds and go for systematic withdrawal plans (SWPs). One also needs to invest the remaining money in growth-oriented assets so that the corpus lasts longer.
NO POST-RETIREMENT PLANNING
Retirement planning should not stop at the age of retirement.
It should include planning for the period after retirement as well.
Also, just like during earning one’s phase, a contingency corpus that can take care of 5-6 months of expenses is a must after retirement too.
RETREATING FROM ALL WORK
Keeping oneself engaged in some activity after retirement is critical.
The chance of falling sick is higher, if you suddenly shift to a sedentary lifestyle, say experts.
Fighting boredom during retirement can be tough and lead to stress. Though opportunities are less for senior citizens in India, you can still find some work, and retired people should take it up.
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