6 Retirement Planning Mistakes to avoid in your 50s
Retirement planning is a must if you intend to keep up the lifestyle you have enjoyed thus far. It is also essential because your expenses multiply as you grow older, with the possibility of health complications. More than anything, today’s retirees enjoy their independence. To maintain a free and comfortable post-retirement life, one simply needs to look at looming retirement in the eye and have a plan for it.
Here are six common retirement planning mistakes to avoid:
Pretending it isn’t happening
A lot of cultures frown upon articulating anything that is expected but unpleasant. You do not talk about death, or the possibility of falling ill, or the potential issues that come with retirement. You just maintain a positive mindset, and everything will be okay. We’re all for positive thinking and the manifestation of positive outcomes, but thought and action must go hand in hand.
Accept the fact that salaried income will cease when you touch 60 years of ageand begin a savings plan, or better, a pension plan right away – one that can provide you with a monthly income even long after your salary ceases. Researching the best retirement plans in India is a good starting point.
Buying a lot of policies
At the other end of the spectrum is the folly of going overboard. Remember that the payout that you receive is linked to the amount that you invest. Putting small amounts in a variety of pension policies could result in you getting a lower sum for each policy. However, if you put a higher amount in a single policy, you can get a higher sum in your time of need.
Not estimating life expectancy
When estimating life expectancy in order to be prepared financially, always opt for an upper limit. Obviously it is better to have the financial resources in the form of investments and retirement plans and not end up requiring them .
For instance, Rajat is better off ensuring that he has financial resources to last till he is 95 (his father and mother too enjoyed life to the ripe old age of 97 and 98 years respectively).
Seniors worry or feel embarrassed about “seeming too positive” when considering financial preparedness and retirement planning for a long life. But look at it this way: being prepared and being over-optimistic are not the same thing. Imagine only having the financial resources to last till you are 80 only to actually be blessed with a longer life!
Always remember to account for inflation while planning for your retirement. Remember that if your lifestyle costs Rs. 50,000 today, it will – in all likelihood – cost Rs. 75,000 to Rs. 100,000, a decade from now. If you are not accounting for inflation when planning your retirement income via investments, what you get might only cover a fraction of your expenses. Sound pension plans in India account for this increase in cost of living.
Insufficient health coverage
Life insurance and health insurance are two different matters – opt for comprehensive health insurance policies that cover you against hospitalization, accidents, and critical illnesses.
Starting to save too late in life
If you haven’t begun already, your 50s are still a good time to begin saving. After all, this is possibly the highest position and the highest income that you have seen in your career. You’re also perhaps partying, shopping, traveling, and your children are independent by this time. Even 10 years’ worth of aggressive investing and focused retirement planning can allow you to maintain a good lifestyle post-retirement.
You should plan for a guaranteed steady stream of income in your retirement years.
You can buy Aviva Saral Pension Plan at as late as 80 years of age. So, you can start saving today and accumulate a corpus, proceeds from your pension fund, etc and invest in Aviva Saral Pension Plan to receive immediate annuity payments, as early as the next month onwards.
For instance, if you buy Aviva Saral Pension at the age of 60 with Rs. 10 lacs you can get annual annuity payments of Rs.50,171 for Single Life Annuity Payout and Rs. 49,502 for Joint Life Annuity Payout. The policy also provides a death benefit – to the extent of the premium amount,to nominees or legal heirs. Additionally, the policy allows you to opt for a loan or surrender the policy in case of a critical illness from six months after the commencement of your policy – this can be a huge relief for seniors when life throws them lemons.