3 Retirement Planning Mistakes To Avoid

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‘The Future of Retirement Healthy New Beginnings’, 61% of the working population in India, aged 45 years and above, would prefer retiring in the next 5 years. However, 14% of them believe they will be unable to do so due to various reasons – ‘financial security’ being one of them.

If this sounds familiar, you are probably making one of these mistakes:

1. Not Starting Early
The golden rule for retirement planning is to start early and stay invested. This way your money has more time (between now and retirement) to grow.

Consider this illustration:
               

Case 1 – Started Early
Case 2 – Started Early
Starting Age
30
45
Retirement Age
60
60
Invested for
35 years
15 years
Monthly Investment (Rs)
2500
5000
Total Amount Invested (Rs)
900,000
900,000
Rate of Return (assumption)
8%
8%
Fund Value at Retirement Age (Rs)
35,21,367
16,88,031

The example clearly shows that even with the same amount of investment the Fund Valueat Retirement in case of an early start is more than double of that in case of late start.

2. Not Saving Enough
Another golden rule for making investments is “Earnings – Savings = Expenses”. That’s right. Make savings a priority. When you have just started your career, you probably do not have major liabilities. Most of your earnings can be saved and invested wisely. Make a plan today to start saving regularly. Use our retirement calculator to know about how inflation can affect your future expenses.

3. Not Increasing Savings
As you climb the professional ladder, you receive perks, bonuses and increments. Over the years, ensure that your contribution towards your retirement fund increases regularly. Some retirement plans Forever Young Pension Plan allow you to save progressively by paying 5% (simple) additional Top up premium every year lasting till the premium payment term.

Wise and timely investment in a retirement plan can go a long way in securing your ideal retirement life.

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