13:17 11 December 2014
People have many plans how to spend their retirement years. All their working hours turn into leisure when they retire. There is plenty time to sleep, shop, eat, read, travel and more. Every retirement dream is achievable with a shrewd approach. It requires a sound financial plan to be able to realise your retirement goals.
You however need to avoid the following common mistakes if you are to achieve the retirement life you envision.
i.Underestimating your financial needs
The worst thing that can happen to your retirement life is to get into arrears because you didn’t plan well for your future.
Be honest with the lifestyle you want in the future. Set concrete objectives with proper estimates for food, medical, housing and other utility bills to ensure that you would have enough money in your retirement years
ii.Not saving (early) enough
It is never too early to open a retirement savings account. Elementary compound interest arithmetic teaches that the longer you save, the more your principal grows. Start saving early for retirement and carry on this habit throughout your employment years.
On one hand, being too aggressive on your investment plans can damage your retirement plan. On the other hand, excessively cautious tendencies may imply that you are losing on possible growth opportunities.
iv.Borrowing against retirement funds
A retirement savings account should be treated differently from an emergency savings account. It is recommended that you put as much money as you can in your retirement plan, but borrowing against it means that you’d have ruined an otherwise great plan. You will have to pay taxes for any withdrawal from the retirement account and pay bank fees for early than expected withdrawals.
The best approach is to maintain hands off approach on your retirement reserves until you retire.