The five major Retirement Planning mistakes and how to prevent them
The foremost cause of hiring a financial planner by a lot of people these days is to realize their need for retirement. As easy it may seem, retiring is not a cake walk and the change in life after that is a complete task in itself.
Also, maintaining the balance between your current and upcoming lifestyle can cause a lot of chaos in one’s mind.
Other than these, there are a lot of other uncertainties and doubts that run in one’s mind before
planning for retirement.
However, a lot of confusions can be avoided with the help of some planning to make your life after retirement easy and smooth.
You just need to take care of some mistakes and avoid them in order to have a better life after retirement.
Mistake no.1: Lack of money management for a better retirement
A large number of my clients really have no idea about how much money do they actually need to manage their lifestyle after retirement.
And many of them make approximate assumptions of how much they would need. But this assumption if gone wrong can lead to total changes in your coming life. where on one hand, a high assumption can totally destroy your whole retirement plan, a low assumption can make you cut down necessary expenses.
Generally, people believe that one needs only 80% of their present income after retirement. This may not be a very accurate method but a lot of people still fail to understand their need of money after retirement.
One should know that the retired people usually spend more on their travel, amusement and other luxuries in their initial years but in the later time, health care costs also tend to rise.
In order to get a more exact retirement figure, we suggest the Kiplinger’s Retirement Calculator. For this, you would require some information such as your Social security payment, your expected retirement income. This would definitely give you a pretty good estimate of how much do you need to save as well.
Mistake no.2: Failure to realize the health care costs in the future
Another mistake that generally happens is the failure to realize the cost of health care in the
retirement age. A lot of people generally fail to calculate this cost.
It has been estimated that a 60 to a 65year old couple that retired in 2012 would require an aggregate of $240,000 in just health care section. Ignoring this cost can actually leave you out of cash in the year when you need it the most.
And the biggest assumption that people make is that Medicare will take care of all these costs which is completely false. In order to learn more about the costs of Medicare, how much it covers and so on you can read our Medicare Survival Guide.
Mistake no.3: Lack of long-term care planning
The time and money needed to take care of an aging person can be very overpowering and a lot of your savings can go washed on this.
As per the US Department of health, 70% of the people who are aged above 65 need a lot of care. And in the metro areas, the average rate of a private nursing home is $109,580. This can be quite too much.
For this, Genworth has designed an interactive state by state guide that can aid in calculating future long term care expenses.
These costs sum up very quickly even when 50% of claims last for more than a year and the medical costs grow up to rise faster.
It is very important to know about your long term care options and how to plan these expenses in the coming years. If you want to get a better idea of it you should read How much does a Long-term plan cost?
Mistake no.4: Inadequate saving in the young days
You should start saving for your
retirement as soon as possible and not to wait for retirement. It is because the compound interest that applies helps really well.
Let us study this example to understand this: if one needs to have $1million at the age of 65, he needs to save approximately $345 a month at the age of 25 for at least 20 years, assuming that the investments would earn an 8% over those 40 years.
Similarly, a 45-year-old would need to save approximately $1698 per month for the next 20 years so as to reach the same goal.
Here, the main aim is to save the same amount for retirement every month. Thus, with a little bit of planning and early saving, you can do very well in your retirement. You just need to do efficient and organized planning and you will be good to go.
Mistake no.5: Failure to update your retirement plan every few years
Your retirement plan needs to be updated every few years as the levels of income and expenses also fall and rise every year.
If your last retirement plan was done six years ago when your second child was born, when your wife got promoted and you shifted your house, then probably this plan is of no use to you now owing to the change in lifestyle.
If you are still under 65 and searching for some kind of employment then you may think of getting retired. However, this article by Mark Miller, Out of work and under 65? Here’s how to retool your retirement plan may help you a lot. You can benefit a lot by reading this article.
A lot of financial planners may give you a retirement plan that nulls after 5 to 10 years.
But at Glassman Wealth services, we help you revisit your plan after every 3 to 5 years in accordance with the changes in your lifestyle be it because of marriage or children.
We help you stay in track keeping all these adjustments in mind for proper and better retirement.
If you are planning for your retirement then at some point you might make some mistakes. We at PTIC, are here to help you in how to avoid the retirement mistakes you can make.
We all know that the time of retirement is when we start depending on our savings and our source of income almost stops.
With PTIC, the best financial advisors can help you in your retirement planning. You can get the best retirement plan which will secure your post-requirement life financially.
We have a variety of retirement plans with us. You can check on your part of what type of retirement plan you want to get.
So, you won’t have to worry at any step when either your retirement time is near or you are already retired. Our best financial advisors are surely gonna help you.
