Retirement is a phase of life that every individual needs to face. Generally, during retirement, several things change; for instance, your body requires more medical attention at a time when the money inflow has become negligible. The only way you can sustain this phase of life while tackling old age and meeting your ambitions like travelling can be met using retirement funds.
But inexperienced individuals often face the problem of making uninformed decisions or following the advice of their friends and families. Since retirement planning is a personal decision, imitating your parents’ or friends’ retirement strategy may not work for you. Instead, you need to have your own retirement plan that helps sustain your current lifestyle and meet future retirement goals.
Here are five financial decisions that you might end up regretting after retirement if you make an uninformed decision.
- Delaying investing early on in life
Young individuals often feel that they should start saving when they have an income that is large enough that satisfies their needs and wants. This basically is rarely a reality. While needs may be limited, a person’s wants may never end. Hence, you may not find any income left to start investing. A smarter choice would be to spend only what is left after saving for investments.
Setting your investment goals early in life helps flatten any unexpected events. You should start investing right from your first paycheck, which can help instil financial discipline for having your investments in place for your retirement plan.
- Retiring early in life
Early retirement is glorified by a few. But the reality is that retiring early requires you to slog immensely during your working years. While it may not always be possible, having a stable income for a long period does help in building your retirement corpus. Most jobs set the retirement age at 60. But it isn’t compulsory to hang up your work boots at this age. You can even extend your service by a couple of years. Further, skilled professionals can use their experience to either provide consultancy services or freelance once they reach the official retirement age in their company. Hence, do not dip into your savings at 60; instead, try continuing for another five-six years which will help to draw a larger pension when you actually retire.
- Copying the investment style of your parents or friends
Personal finance is personal in nature. Hence, it is not advisable to imitate someone’s strategy. Instead, you can customise your own strategy while learning from the mistakes your parents made. For instance, your parents might have stayed away from the stock market. But the times have changed. As regulating agencies have become sharper at protecting the interest of the investors, you need not worry about getting scammed. Moreover, reliable information is available in the public domain to make an informed choice. But remember to migrate your investment to less risky investments with stable returns as your retirement age approaches.
- Skipping on health insurance covers
According to the National Health Profile of 2019, only 37.2% of the individuals were covered under any form of health insurance policy in India. While it is a concerning number, it means that, still, many individuals take a dip into their savings to fund medical emergencies. Resorting to your retirement fund for medical treatments can leave you with very little corpus for your retirement. Instead, you can choose to invest in a health insurance policy that helps to pay for the treatment costs. Depending on your and your family’s medical history, you can buy suitable health insurance plans. Further, these plans also allow you to cover critical life-threatening ailments that can be fatal.
- Ignoring the importance of a term insurance policy
Just like health insurance is essential to tackle medical requirements without resorting to your hard-earned savings, it is equally important for you to buy a term insurance. A term insurance plan is a pure life insurance product that compensates your dependents in the event of an unfortunate death. Hence, your dependents can sustain their present standard of living without having to go through financial hassles.
There are some financial decisions that you need to avoid to regret during your retirement. When selecting a suitable pension plan, you can make use of a retirement calculator that aids in comparing the myriad policies available in the market. The retirement calculator not only helps to compare the premiums, but also the policy features, for making the smart choice of which would be the best plan for you.