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4 Mistakes That Can Sabotage Your Retirement

4 Mistakes That Can Sabotage Your Retirement

Retirement is a journey and not a destination! After years of working and investing towards your retirement, it is important to watch out for these mistakes that may make this stage of your life unbearable.

Helping out adult kids and family

Many retirees face difficulty when planning to retire if they are not careful, because they are either caught up helping their adult children or family members financially that they end up not investing in their retirement or using most of their retirement savings to bail them out.

It’s almost a natural instinct for a parent to go over and beyond to help their children and that is great. However, it should be done with a plan. Make a plan for gradually withdrawing financial aid for your children. Have a discussion with them about the changes, have a budget and model financial restraint.

Also, when it comes to family, help out when you can but do not overdo.

Investing too conservatively in Retirement

Whether you are nearing retirement or already retired, it is only wise to invest wisely. That means forfeiting market returns or growth to preserve your capital. However due to inflation, savings reduce and the money may not stretch through your retirement phase.

The best approach would be to learn about investing. This will build your confidence about taking calculated risks to make profit even as you grow older and also diversify your investments.

Forgetting the Taxman During Retirement

Good financial planning helps you ease the load of paying tax else they may end up taking a noticeable amount from your retirement income. Why is planning important? It will help you factor in the tax element as you plan for your retirement, hence it does not come to you as a surprise.

Diversifying your investments and delaying your withdrawal are some of the ways that you can mitigate the tax issue

Overlooking Estate planning

An estate plan helps your beneficiaries avoid difficulties and disagreements. A good estate plan is comprised of five key elements: Will, Trust(s), Power of Attorney, Health Care and Beneficiary Designation

It is simply putting your house in order before you are too sick or elderly. With that, you will control where your money and possessions will go. It’s a kindness to your inheritors and to yourself.

Similar article: Why Retirees Need a Health Cover

Summary

There is no particular strategy on how to retire. The best thing you can do is to plan and work towards your retirement goals. With that said, the aim of this article was not to sell a perfect retirement rather to point out a few useful things; to help you know what to do and what not to do during that delicate and important time of transition.

Retirement is a journey and not a destination! After years of working and investing towards your retirement, it is important to watch out for these mistakes that may make this stage of your life unbearable.

Helping out adult kids and family

Many retirees face difficulty when planning to retire if they are not careful, because they are either caught up helping their adult children or family members financially that they end up not investing in their retirement or using most of their retirement savings to bail them out.

It’s almost a natural instinct for a parent to go over and beyond to help their children and that is great. However, it should be done with a plan. Make a plan for gradually withdrawing financial aid for your children. Have a discussion with them about the changes, have a budget and model financial restraint.

Also, when it comes to family, help out when you can but do not overdo.

Investing too conservatively in Retirement

Whether you are nearing retirement or already retired, it is only wise to invest wisely. That means forfeiting market returns or growth to preserve your capital. However due to inflation, savings reduce and the money may not stretch through your retirement phase.

The best approach would be to learn about investing. This will build your confidence about taking calculated risks to make profit even as you grow older and also diversify your investments.

Forgetting the Taxman During Retirement

Good financial planning helps you ease the load of paying tax else they may end up taking a noticeable amount from your retirement income. Why is planning important? It will help you factor in the tax element as you plan for your retirement, hence it does not come to you as a surprise.

Diversifying your investments and delaying your withdrawal are some of the ways that you can mitigate the tax issue

Overlooking Estate planning

An estate plan helps your beneficiaries avoid difficulties and disagreements. A good estate plan is comprised of five key elements: Will, Trust(s), Power of Attorney, Health Care and Beneficiary Designation

It is simply putting your house in order before you are too sick or elderly. With that, you will control where your money and possessions will go. It’s a kindness to your inheritors and to yourself.

Similar article: Why Retirees Need a Health Cover

Summary

There is no particular strategy on how to retire. The best thing you can do is to plan and work towards your retirement goals. With that said, the aim of this article was not to sell a perfect retirement rather to point out a few useful things; to help you know what to do and what not to do during that delicate and important time of transition.

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