4 mistakes of Retirement Planning

Retirement Planning is not just about how much one needs to save for retirement and where it should be invested. Mistakes in dealing with other related areas can in fact derail otherwise careful retirement planning.

Here are four mistakes that you should avoid while planning your retirement. Some of these relate to other financial goals and working after retirement.

Ignoring other goals

While planning for retirement is critical, do not ignore planning for other goals. “Along with retirement planning, one should also plan for any pending expenses such as kid’s higher education, wedding, etc.
If you do not plan for such goals, you may jeopardize your retirement. “If you don’t plan for other critical goals, you may end up dipping into your retirement corpus to meet them.

Not planning for regular income

Generating regular Income is essential to securing one’s retirement. Gradually withdrawing money from the accumulated corpus may not be the most suitable option. Investing in an annuity can help you earn a regular income. But their annual return is low—around 6.5%—and they are also taxable. However, experts advise people to invest a part of their retirement corpus in an annuity.

No post-retirement planning

Experts say that retirement planning should not stop at the age of retirement. It should include planning for the period after retirement as well. “Planning for the post-retirement phase is critical. Financial requirement is like the three stumps in a game of cricket—liquidity (for contingencies), regular income, and growth of the remaining corpus (so that it lasts longer).

Retreating from all work

Keeping oneself engaged in some activity after retirement is critical. The chance of falling sick is higher, if you suddenly shift to a sedentary lifestyle, say experts. Fighting boredom during retirement can be tough and lead to stress. “Though opportunities are less for senior citizens in India, you can still find some work, and retired people should take it up,