Saving and planning for retirement is a journey that can take several decades. During this time, you are likely to get comfortable when you think you have saved enough. However, some retirement planning mistakes may make your retirement life worse off. A report by National Institute on Retirement Security revealed that most retirees are unprepared for the retirement life. With a median of $120, 000 in savings, an average retiree is unlikely to sustain a 30-year retirement life.
Retirement planning mistakes that will ruin your savings:
- Failing to Save Enough
Many people head into retirement with fewer savings than they would like. These savings are unlikely to meet their daily living expenses and health care costs. Retirees make this mistake by either saving too little or starting too late. But, how much is enough? It may depend on your lifestyle and the cost of living. You can use a free savings calculator to see how much you need to save.
Supposing you start working at 25 years and retire at age 65, you should save for at least 30 years in retirement. For every year worked, you should cover three-fourths of expenses in your retirement. To be on the safe side, save more money than you would need. Instead of saving 10% of your income, you can increase this rate and forego some of your current expenses. You need to save approximately 70 to 80% of the income to live the same lifestyle in retirement.
- Too much Debt
Going into retirement with large amounts of debts is not only risky but also a big financial mistake. Unless you are earning investment income with a higher interest rate than the debts, you should be worried. High-interest debts such as credit card debts should be paid as quickly as possible. As a …