So to make sure you don’t mess up your plans you need to dodge these 3 lethal mistakes…
Mistake #1: Underestimating how much you need to retire
With innovations in the medical world people are living longer.
And if the retirement age is ‘fixed’ around 65 and people are growing older and older, there’s going to be problems. It means that you’ll need even more to sustain yourself for the rest of your life.
So one big mistake you can make when planning for your retirement is underestimating how much you’ll need to retire.
Here’s a small guide for what your savings goals should be for when you plan to retire:
When you reach the age of: How much you should have saved:
When you reach the age of:
How much you should have saved:
1 X your salary
3 X your salary
5 X your salary
7 X your salary
What this means is, when you reach the age of 45 you should to have saved about 3 times your yearly salary (of your salary at that age).
What’s great about this table is that it serves as a quick check to see if you’re on track for retirement.
But for an alternative check to see how much you’ll need click here.
Mistake #2: Investing too conservatively!
Here are the facts…
The government tries to keep inflation between 3-6%. However they’ve been battling to keep it under the higher side of this spectrum and it’s currently hovering around 6%.
What this means is, if you were to keep your money under the mattress every year, it would lose 6% of its value each year…
To combat this many people have their money placed in a retirement annuity. But the problem with retirement annuity is they could be invested too conservatively.
I mean, can you honestly tell me where your funds place your money? Or if they’ve been able to meet their benchmarks?
If you can’t answer these questions it will be impossible to know if your money is at least beating inflation.
Mistake #3: Placing your eggs in one basket
If you’ve been placing money in a retirement annuity it’ll definitely help you plan for your retirement.
It kind of ‘forces’ you to save. Also, it ensures you’ll have a better retirement by limiting your access to these funds until you retire.
But if that was the only facility you’ve used to save you could have problems. For instance, if towards the end of your working life you realise your retirement funds haven’t been able to meet their required savings targets.
So to avoid this crisis you should spread your investments into other places.
What you should do is split your money into many types of assets. Things like property, shares, bonds, offshore investments. In this way, if one of the markets you’re invested in drops, the others will still be able to profit and keep your money growing.
Don’t make these mistakes or your retirement won’t look so glamorous!