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| Mistakes of Retirement Planning |
The principles of managing your financial life are very simple and everyone knows them by heart:
• spend less than you earn
• regularly put away some money for the future
• when you're approximately 65 pack up your desk, slap on some sunscreen and go to milder climate.
Regrettably it is enough to make a couple of mistakes to spoil your whole retirement plan.
Not saving enough
Before starting to save you have to decide what you are saving for. This will help you understand how much money to put by and when to start doing it. Some people say that it’s enough to save 10 % of your income. But if your financial plans for retirement are great and you started saving at the age of 50, 10 per cent may be not enough.
First of all you should compare your financial objectives and savings.
Not saving at all
If you think you are too old to save, or that it's too late to change your future, or that the market is just too risky to make long-term investments, please change your opinion. And if don’t save at all, please change your way of life.
Remember, that the earlier you start saving the more money you will have in future. Don’t forget that it is never too late to start saving or investing. Don’t worry that small annual contributions will not grow into a big sum in future. Try to count the amount you will finally get by adding a certain amount each year to your IRA, add the percentage it earns every year and you’ll see that it’s worth doing.
Don’t be afraid to invest your money into the market, it may be risky but not riskier than doing nothing.
Forgetting about health-care expenses
Health care is very closely connected to retirement, elderly people have much bigger health problems than young ones. The cost of health care in America is increasing considerably every year and, since your Medical Insurance doesn’t cover all medical expenses, you should remember to include such expenses into your retirement plan.
Overpaying to invest
There is a very simple investment rule – the more you pay to invest, the smaller is the return. Since investing your money is very risky, the probability that you will get more than you invest is not so big, especially if you invest a lot.
Going it alone
Planning and saving up for retirement can be a long and lonely process. But doing it alone is not compulsory. Try to involve in this process some financial partners, for example, your neighbors or spouse. It would be easier to develop your retirement plan if you will have someone you can talk to, share ideas and ask questions.
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