The thought of retirement can cause a lot of stress, as many soon-to-be retirees feel unprepared for their golden years
One of the biggest predicaments for those approaching retirement, is maintaining the quality of life they currently live, once they no longer have a regular income. Sufficient and effective retirement planning is essential as you enter this stage of life. So take the stress out of retirement by avoiding these three retirement planning don’ts.
1. Don’t procrastinate
As you have probably heard numerous times before; saving for retirement is not something that should be left to the last minute. A common problem associated with retirement planning is how little people understand about how their money is being invested, or ought to be - a factor that leads many people to put it off until it’s too late.
When retirement planning, how you save can may be just as important as how much you save. Inflation and the type of investments you make play important roles in how much you'll have saved at or during retirement. You should be sure to get involved in the planning stages from the get-go, with your employer, either by asking them to start a plan on your behalf, or by fully understanding how your current plan works. This will give you more insight and confidence when it comes to investing your money in the future.
2. Don’t plan to live above your means
As you approach your retirement, you should be asking yourself ‘how much income do I need to maintain my current lifestyle in retirement?’
If the amount is too high, your retirement may seem unattainable and the entire planning process will leave you demotivated and even more stressed. If your income assessment is too low, you could run into a difficult financial situation later in life and have to make drastic, unwanted changes. According to Forbes, the general rule of thumb is to allow for 80% of your current annual income during retirement. One should also keep in mind that retirees spend more money on entertainment such as taking summer trips to that property for sale in Calpe, Spain, the one you have been eyeing out as an ideal investment opportunity! Also, keep in mind that other expenses such as your healthcare needs may also escalate.
3. Don’t be afraid to diversify your investments
There are so many investment options to choose from, and much advice on how to best maximise your returns for each, that it often leaves would-be investors dizzy. This coupled with the instability in the current global marketplace, you may be left asking yourself, is my money not safest under my mattress?
The simple answer is no, and can be found in the solution of diversification. Or more simply, not putting all of your eggs in one basket. This is the best strategy, as your money will be spread across a diverse portfolio and not be limited to one ‘risky’ asset. Regardless of what type of investments you choose; whether they are stocks, bonds, or real estate - don't put all of your retirement money in one single asset. Having contributed to savings in your retirement fund month after month, year after year, the last thing you want is for it to be lost at the next market crash.
One of the best, and least risky investments, is property. So that property for sale in Calpe that you have been eyeing out is definitely worth a second look, and possibly a visit to a real estate company like Seanest, who can offer you sound property investment advice.
Image: Soul Care Resources