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5 common mistakes people make when planning for retirement

Generally we all makes mistakes in life but there are certain phases in everyone's lives where mistakes just won't do! One of these very vital avenue is none other than retirement which, be it planned or sudden, in evidently comes in every individual’s life. Retirement planning is one of the important goal of life and you may not think twice about it  when you are young and healthy, but it would benefit you a lot in your future years if you start planning right away.

This particular avenue is very goal specific and hence it is advisable to heed the experts i.e. wealth advisors, who know where to invest money, what is your current situation and your expectations from future, and how to help you make more money from whatever amount you have in surplus.

Research shows that investors often go wrong when considering retirement planning and end up making mistakes when they invest for retirement.

Here's a list of some of the 5 most common mistakes an individual should avoid when they start to invest for retirement

1. Retiring too soon

Many people start planning for retirement in their 40s since they have time to make more money and plan future wisely by that age. But it is difficult to do so due to many responsibilities like planning for children’s higher education, marriage and even paying off loans. The main demerit of it is that lack of time doesn't offer your investments the compounding effect and a chance to grow over time. Another disadvantage of retiring soon is that you may have less time to make your diversified investment portfolio.

2. Making incorrect assumptions for future goals

Often people assume that their future years will pan out exactly how they plan it, but it is not necessarily true. Mostly people take retirement on the basis of their savings. Don't forget that while you are busy working, your current earnings can adjust to rising inflation but your retirement corpus can't adjust to it, 20-30 years from now. Investors should this take advice from wealth advisors and ensure that they factor in the inflation and invest for retirement accordingly.

3. Not accounting for medical cost

Medical expenses are gradually increases day by day and treatment costs are also rising. The most important thing at an older age is health, without which you can't enjoy your retirement corpus either. A long term health insurance, for example, could take care of your medical expenses in future.

4. Picking wrong investment avenues

Some people are too concerned about their retirement years and they start saving early by stacking up on money back insurance policies, thinking it will give insurance and allow them to make more money. Insurance should be taken only from certified organization and for the purpose of emergency and when you need coverage for medical expenses. The concept of earning from insurance doesn't really help because emergency can strike at any hour and you can't expect the money back in future by then, because you would have already used it! Hence, insurance policies should ideally only be bought after discussing in-depth with family, close friends and with the help of wealth advisors.

5. Not diversifying their portfolio

People often make the mistake of putting all their saving in one idea and not diversifying their portfolio. If you invest your all saving in one plan suppose if it fails then your all the savings will be wasted and you don’t have any backup. So it is very good to invest your money in different places.If you are well-versed with your investments,then you will do a better job of making a diversified investment portfolio. If you invest without understanding the features of investment then it may not always end well for you or your investments. Consult the right wealth advisors, and don’t make mistake of putting all your eggs in one basket.

While it is important to make more money now and invest for a future, one must also realise that sometimes just an early habit of investing can also do wonders! Invest early and secure your future years while you live your present.