So what are some of the mistakes that people do?
#1. Underestimating cost of living
Most people in the early stages of retirement planning do not have a clear idea of how much they will need. Some advisors suggest 80% of your income is the correct target for calculating your retirement needs. That would seem very arbitrary to me, as it will depend on how much your life style is going to change after retiring.
#2. Not making sufficient provisions for health care costs
For a lot of people thinking of the possibility of not being in good health doesn’t appeal much. But we are liable to the possibility at some point. As we get older that possibility becomes greater. Yet not planning for higher health care costs is a common mistake.
#3. Saving Later Rather Than Sooner
This is paramount to being successful in reaching your retirement goals. The effect of compounding interest plays a very important role when we start saving early on. Like Einstein said “Compound interest is the eighth wonder of the world, he who understands it earns it, he who doesn’t pays it”
#4. Not Revising your Retirement Plan Regularly
Your retirement planning should be revised regularly, on a yearly basis. Some advisors suggest revisiting your retirement plan every 3 to 5 years. I say that may not be enough as many changes could have happened precisely in the previous year. Why would you wait to revise your finances for retirement 3 or 5 years later.
#5. Not researching Your IRA Custodian
The dangers of having an incompetent person manage your portfolio range from you’re investment taking a hit to damage and loss of property.
As you can see, every retirement plan asks for care, otherwise you might end up with some regrets.
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