They call it the ‘golden years’. After a lifetime of work, you’ll get few more years just to relax. Play with your grand kids, travel the world, rest.
This is the ideal view of retirement.
The truth can be a little harsh though: in most countries the social security system is crumbling, people retire in debt, some with little to no money saved for those ‘golden’ years, rent is expensive, healthcare is almost impossible to afford without some costly insurance etc.
For most of us retirement might not be as dreamy as we’d have planned.
This is why properly preparing for those years is crucial: save money, invest in various pension plans, buy gold, start a small and easy to run business, these are just few ideas to get you on the right foot for retirement.
So, without too much ado, let’s see which retirement mistakes we need to avoid:
Retirement mistake no.1 – no plan
It’s baffling to see how many youngsters life in a la-la land and just ignore retirement. They say they need to wait until they marry. Or get a better job. Or have kids. Or turn 40.
The sooner you start adding to your retirement funds, the easier it will be and the more money you’ll have in your accounts.
Retirement mistake no.2 – you cash out your pension
There are very few reasons to take out all your pension money in a lump sum: a huge medical problem comes to mind. Otherwise, your adviser is the only one to benefit, since they are being paid a percentage of your money. In this case, the commission can be as much as a new car for said adviser.
In most cases it’s advisable to choose a monthly pension and budget it as if you’d do with your regular pay-check.
This way you’ll have money every month and it’s easier to prevent mistake no.3 as well:
Retirement mistake no.3 – spending too much money
If you cash out your pension funds even when you don’t really need so much money, one thing is bound to happen: you’ll squander it very fast.
After tens of years of managing your finances, you should know that most people don’t know how to handle large sums of money, hence the reason many lottery winners end up poorer in few years.
Weird enough, many pensioners found out that, they tend to spend more, after they retire and not less as they’d expected. This is called deferred spending and is easy to understand: people have put off a lot of traveling and fun for when they’d retire, so now they ‘cash in’ on those activities.
So, just as you did all these years, keep a budget and curb your spending.
Retirement mistake no.4 – being reckless with your health
It’s normal for a retiree to have more health problems than a 20 year old, but a lot of these issues can be prevented by having a healthy lifestyle.
Retirement is not the best time to gain too much weight, become less active and ignoring your health.
Make sure you keep your body in great shape, since medical bills are VERY expensive.
Retirement mistake no.5 – taking too many risks with your money
It’s easier to become greedy and try to get even more bang for your buck, hence the reason many get into very risky investments.
These can work, but, if they don’t, it’s your future at stake, at an age when it’s not as easy as it was before to make up for these losses.
As long as you have a decent pension, be conservative with your investments. It’s better to start a small business (working from home, few hours/day), than to recklessly invest in all kinds of risky schemes.
Retirement mistake no.6 – giving up any lucrative activities during retirement
I personally know a lot of people who were able to retire in their 50s and have spent all this time watching TV and just sitting on a couch.
As long as you are in good health, it makes a lot of sense to still do something during those years: as mentioned before, try freelancing, a small business.
Not only will this keep income flowing in, but it will keep your mind alert, you’ll not lose touch with society and it feels great to still be able to do something. Sure, most might make few hundred bucks/month, but, hey, it’s money you earn, not money you spend.
Can you add more retirement mistakes to our list? What else should we watch out for?