Key retirement mistakes to avoid for a financially secure future
What's the story
Retirement planning is the key to ensuring you are financially secure in your later years.
However, many people fall into common traps that can derail their savings goals.
By knowing and avoiding these pitfalls, you can gear up for a comfortable retirement.
This story lists key mistakes to avoid while planning for retirement, helping you unlock potential savings and secure your financial future.
Expense estimation
Underestimating future expenses
One of the biggest mistakes is underestimating future expenses.
Most people assume their costs would fall post-retirement, but that's not always the case.
Healthcare costs continue to increase with age, and so do leisure expenses.
It is important to have an honest budget accounting for inflation and unexpected expenses to ensure your savings will last for the entirety of your retirement.
Early start
Delaying retirement savings
Procrastinating on saving for retirement can do a lot of harm to your future.
The sooner you start saving, the more time your money gets to grow with compound interest.
Even small contributions made early on can add up to a lot over time.
Make setting aside funds for retirement a priority as soon as you can so that you get the most out of it.
Inflation awareness
Ignoring inflation impact
Ignoring the impact of inflation can erode purchasing power over time.
This directly affects your ability to maintain a desired lifestyle during retirement.
Hence, it is important to factor in an average annual inflation rate when calculating how much you need to save.
Adjusting investments periodically, as well as considering assets that typically outpace inflation, can help protect against this risk.
Withdrawal timing
Withdrawing too early from retirement accounts
Withdrawing funds too early from retirement accounts can invite penalties and stunt savings growth.
Accounts often penalize withdrawals before 59.5 years old in the US or 55 in India, under specific EPF rules.
So, carefully plan withdrawals to avoid penalties and consider tax implications at different ages, ensuring compliance with each account's regulations.