With retirement just around the corner, some people can get carried away and start envisioning themselves happily spending the last years of their lives in Singapore. However, it is important to note that even after all those years of careful planning and savings there is still sufficient time to make a terrible mistake that could cost you that comfortable retirement you always dreamed of. Let’s review the common errors that people tend to commit when they draw close to the retirement age.
Don’t Think of Retirement as a Fixed Number
While there are many professional financial advisers out there, not all of them are well intended and at some point, they could recommend you to switch to actively managed funds. What this actually means for you is that you will be paying more fees and commissions in a period when you should be saving cash. The only situation when the actively managed funds would constitute a viable solution is when the fees and commissions are eliminated.
If you notice that your retirement funds are far off from what think you need for a carefree life, then chances are you will be tempted to try your luck in the stock trading and investment niche on your own. This is one of the biggest mistakes you can make because the ins and outs of individual stock trading require years to learn and even more years to master. In addition, with age comes the decrease in your cognitive capabilities – to a larger or smaller extent – and that could be a major impediment when you need to make critical decisions.
In general, if you want to enjoy your golden years and have no care in the world, then it is highly recommended to pay off all your debts before you reach retirement. The last thing you want is to retire and have no control over your personal finances.
As they gain more experience in their field, men and women will start earning more cash and a larger income usually means a higher temptation of spending more, particularly on things you don’t really need. Unfortunately, once you get used to this kind of lifestyle it is incredibly difficult to turn back and even worse, you could be taking money out of your egg nest just to sponsor this kind of lifestyle. Unless you plan on eating pet food throughout the golden years, don’t alter your lifestyle just before retirement.
Which Right Retirement Plan Is Right For You
It can be really hard to choose the best retirement plan for you. It is especially difficult if you would take into consideration both advantages and disadvantages of every plan. You might feel a little intimidated facing the salespeople, bank employees or insurance agents who will try to talk you into getting a retirement plan from them. It can be quite confusing to talk to so many people with different opinions about how to choose the right plan that will help you save up for the future.
If you want to make the best choice in planning for your future, it is very important to consider your present situation so that you can make an informed decision. If you want to retire comfortably, you must always remember that it is essential to make a decision based on facts and what works best for you. Do not just follow the trend. Research and plan it out carefully before you make a choice of the best retirement plan for you.
What’s Your Desired Lifestyle?
Ask a retirement planning expert about the right time to plan your retirement and they will say as soon possible. Even if it seems to be a long way off, it is sensible decision to start planning as early as possible. How much you need to save will depend on your current expenses, and your financial health or income. Remember, it is your own savings that will help to make retirement fun, and comfortable.
Smart people always try to get rid of debt as quickly as possible before getting closer to the retirement age. For example – if you have any expensive debt such as a high-interest credit card, the first step in your retirement planning should be to pay off the debt as quickly as possible. This is one thing that you should do on the first go. You also need to find out from which sources the money comes from. Apart from getting pensions, you need to find out all other sources when planning for your retirement needs. The sources can be your own savings, fixed interest investments,loans from a licensed money lender and income from any other schemes. Your next priority should be to pay off the mortgage. This will give you peace of mind you are in safe hands.
Along with savings and fixed interest investments, it is also important to plan for the non-financial aspects of retirement too. Although it is difficult for a 25-year-old to imagine what life will look at 65, still you should brainstorm some ideas. Visualize the situation when you are free from daily struggle of making ends meet with more time to do whatever you want. When you retire, you will not have any more stressful meetings, deadlines, or workplace negotiations.
Picture the retired lifestyle you need. With right preparation or homework, you can hope for a life that is both engaging and relaxing. If you indulge in perfect retirement planning, you will be able to reward yourself with a quality lifestyle that you have earned and deserved.
You May Have No Choice But to Stop Working
Retirement is the most distant goal and a must for all, that is why you need to fulfill your financial goals before then.A certified financial planner or CFP professional will help to identify the goals and suggest strategies to achieve them. The plan once made needs to be monitored periodically to ensure that it is moving in the right direction in the face of changing market dynamics. Such professionals are good at taking all factors into account while crafting a wholesome financial plan, the retirement planning being an integral part of the same.
You have given a broader aspect of early retirement planning and financial management. If I may add one should do his cash flow analysis and make strategy and implement it in the most disciplined way. Creation of cash flow asset as real estate and other such assets which will ensure regular income is a must before one plans to hang the boots.
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