Retirement Planning Errors

sarahheller By sarahheller, 5th Mar 2015 | Follow this author | RSS Feed
Posted in Wikinut>Money>Pensions

Planning for retirement can be a difficult process for many people, and most people will find themselves changing their plan fairly frequently. Throughout the retirement planning process, however, it is important to avoid these costly errors.

4 Mistakes

1. Starting too late. Many people make the mistake of assuming they can start their retirement planning just a few years before they retire. In actuality, saving up enough money to live comfortably for the next twenty or thirty years is not something that most people can do in a few years. Even if you can’t put a lot aside when you’re younger, just starting a nest egg that earns interest over the next several decades will give you a much better shot at having a comfortable retirement than waiting until you’re older.
2. Putting all your eggs in one basket. Too many people count on just their pension or Social Security as their only income source when they retire. By doing this, they’re putting too much faith in the financial security of just one investment. No one knows how the rules of Social Security are going to change, and many private and public pension plans have gone through bankruptcy and now pay their retirees only a fraction of what they were promised. Try to have at least three different income sources that make up your retirement portfolio. Include different private funds along with a pension, annuity, and/or Social Security.
3. Assuming you can always go back to work. Too many people retire with less than they should and withdraw funds too quickly under the assumption that they can always go back to work if they need the money. In truth, by the time most retirees run out of money, they have been out of their field too long to qualify for most jobs, and/or they have too many health issues that prevent them from taking on work. If you really want to leave this door open, take on part-time or consultant work when you don’t need the money to keep up your skills and industry contacts. Save the money you make to shore up your overall retirement funds.
4. Not planning for health care expenses. Many people who are used to their company health plan ignore the costs of basic health services. If you retire before 65 you’ll need to pay for your own policy. Once you’re on Medicare, you will still need to pay for your share of hospital bills. Buying a long-term care insurance policy is also a good idea.

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author avatar Sivaramakrishnan A
5th Mar 2015 (#)

It varies according to country. Only developed countries give state support by way of social security and some others have none. Diversifying income streams is definitely the best goal as you have recommended - siva

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