While many understand the importance of financially securing their retirement, they often commit fundamental mistakes in properly analysing their retirement needs and planning accordingly.
This can happen due to the prevailing myths surrounding various aspects of retirements and less awareness about the facts that can actually affect retirement.
5 Common Retirement Planning Myths & Facts
While there is no shortage of myths surrounding retirement planning, here are some common ones and the corresponding facts.
- Retirement Planning Is for Old or Middle-Aged People
Another version of this myth is to think that it’s too early to even think of retirement. Young people often think that first, they should enjoy their life, all future planning can wait.
While enjoyment is necessary, you cannot ignore retirement. Furthermore, you never know whether you would be able to stay on your job till retirement in the wake of unforeseen circumstances like health, Covid-19-like crisis, etc.
Therefore, the ideal time to plan for your retirement should be right after you receive your first salary.
- A Large Income Is Required to Plan for Retirement
While a large income can indeed help, it is not a prerequisite for planning for retirement. Even if you do not have an attractive income at present, you can still plan for your retirement through financial discipline, focus, and healthy investing habits.
Invest small, invest regularly and keep investing for a long period. This tip alone can help you grow your wealth exponentially.
- Saving Enough Will be Sufficient
Many people understand the importance of savings, but they tend to overestimate the power of their savings. Such people forget to take two important factors –
- Inflation
Inflation erodes your wealth over time by decreasing the value of your savings, resulting in decreasing purchasing power.
- Increased Life-Expectancy
Thanks to spectacular advances in medical science, our average life expectancy has increased. Therefore, you can be expected to live longer than your ancestors.
The combination of these two factors can potentially nullify or reduce the value of your savings over time. Therefore, it is imperative to arrange for regular income even after retirement by investing in annuity plans.
- Regular Expenses Will Shrink Post Retirement
Individuals may argue that currently, there are many regular expenses like commuting to work, children’s education, etc., that will cease to exist after retirement.
This may be true to an extent, but retirement can also bring new expenses in the form of healthcare, gifts to grandchildren, etc. Therefore, it is wise to plan for your retirement now to save the worries in future.
- Retirement Can Be Delayed
People who love their job often think that they can continue to work way past the stipulated retirement age. However, all things must come to an end. While you can delay your retirement for few years, it is not practical to think about working indefinitely. Sooner or later, age will catch up, and you will have to hang your boots even though you loved your work. While there is nothing wrong with working in old age, you must have a plan B in the form of a good retirement plan.
Apart from the points mentioned above, there can be many more myths floating around retirement planning. However, the most practical and arguably the best way is to ignore all such myths and start making determined efforts toward financially secure your retirement.
