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Five retirement planning mistakes to avoid

by , 03 October 2014

Planning for retirement can become quite frustrating at times, especially if you start saving late or can't afford to save enough each month.

However, you can always play catch up on your savings and you can make sure you don't make the following five mistakes that could ruin your retirement plan.

Retirement mistake #1: Withdrawing money from your retirement account
If you’re in desperate need of cash, don’t borrow money from your retirement account, because you’re likely to never put that money back. You should have a separate savings account and, preferably, another fund for emergencies. This way, you won’t be tempted to withdraw money from your retirement savings.
Retirement mistake #2: Not diversifying your retirement portfolio
In order to make the most of your retirement savings, you should rebalance your portfolio regularly. You can diversify your portfolio by allocating a few slots to other classes and other regions. You can consider adding index funds or fixed income funds into the mix, to protect your portfolio against market volatility. 
Retirement mistake #3: Waiting until you have enough money to save
Let’s face it, this is the most commonly-used excuse in the book. We always postpone saving for a later time, but forget that we are only fooling ourselves. It’s important to start saving as quickly as possible for retirement. If you wait for the perfect conditions, you’ll never get anywhere.
Retirement mistake #4: Saving too little
You should save at least 10% of your income for retirement. As you age, you should aim to increase this percentage and save as much as possible.
Retirement  mistake #5: Underestimating your retirement needs
One of the biggest mistakes you can make is to underestimate your retirement saving needs. Your lifestyle is not likely to change drastically once you retire. Specialists recommend that you will need approximately 80% of your current income to live comfortably during retirement. But this percentage may vary, depending on your needs and on what you expect to do during retirement. If you plan on traveling the world, then you better start saving more while you can.

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Five retirement planning mistakes to avoid
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