Are you making these retirement mistakes?
What are the normal Retirement Mistakes that I am seeing very regularly?
1. Not working to a Retirement Plan: I am surprised at the large number of people who have no Retirement plan. Their refrain is “we will not live long like our parents”. Fine, I am sure you plan to die at 65….just in case God has plans for you to die at 95 WHAT WILL YOU DO FOR MONEY FOR THE EXTRA 30 YEARS?
2. Not taking Retirement plan seriously: ‘Oh I will get by’ or ‘I am only 35..what is the hurry?’…it is impossible to teach financial planning to people who do not understand numbers.
3. Just NOT saving / investing enough: If you are about 40 years of age..you need to do a SIP of at least Rs. 100,000 a month just FOR RETIREMENT ALONE. ….and of course pray hard. Stop thinking that Retirement plan that you bought from Hdfc Life Insurance paying Rs. 10,000 per annum is going to be your retirement kitty!! It will probably pay for the breakfast during your retired life.
4. Withdrawing from Retirement plans: this is a double whammy. You pay tax at an atrocious rate (you pay tax on the amount withdrawn not on JUST the appreciation. Many people do not know this / do not recognize this mistake / problem.
5. Opting out of Provident fund if given a choice: Signs of overconfidence that you can manage your corpus yourself ?
6. Taking too much risk or taking too little risk: all the money in debt is height of foolishness….which can only be matched by putting everything into equities! I see people in both ends of the spectrum. Innumeracy? Fear of the unknown is worse than a shortage of money at retirement? Figure for yourself….
Now see where you stand….
Prashanth
The people who retired so far got away without investing as they could rely on a pension or children. The current and next gen will have to rely on invested funds and that’s going to be interesting.
I wish there were more blogs of people who are relying on their investing money for their retirement…
R Shanker
Unfortunately majority of people seem to be making these mistakes. Otherwise smart people buy ULIPs & other policies for retirement planning, spend crazy and leave the remaining money in Savings account. I keep sharing this blog and some other financial blog links on my facebook profile and people don’t even bother paying attention( Get plenty on all other kind of links). Most Women are even worse at having any sort of understanding of investing or planning (I am a woman btw). Why is money such a taboo topic in Indian society?
Mira D
Guilty as charged, overweight equity.
Ok, some RBI bonds and tax free. And PPF EPF.
Bharani
My first post here, though long-time reader; did couple of posts, but got deleted, not sure why!
Anyway, interesting point Prashanth brought out – is that the nuclear family system that forces this logical conclusion? I think people think this is an easy fix – since you think your children will not support you, save money for yourself.
I am looking for a moral high ground from people, especially literate population (don’t know how classify them though!), to clearly separate out money and family values. eg: I am saving/investing acc to my plan, but won’t let it come into play during my old age – financially supporting myself or supported by my children – emotional support indeed must come from children. If the same thought, values, beliefs I am able to inculcate into my children, why would it not work?
That’s just me!
That said, I understand people are diff, money can do anything (saw in some posts before). But it all starts from elders – not only teach finance to kids, but also how not to let money control your family values.
Gourav
Thank fully I started investing for my retirement from 2014 august.Now I invest every month without fail.Also I calculated the number of months till 2014 Aug since I joined my job.It was 70.So I put lumpsum of 70*5000.Now i am investing 10% of my Monthly Indian salary. All these I started after reading subramoney.Last july I came to know about this blog from Aifw group in FB.After knowing about this blog I read all the blogs in the category Retirement. Fot 1 week I was reading only subramoney.There is one line subra sir always write STOP GO AND START.Luckily I had a demat account and I strated immediately. I am into direct equity and that is a different question altogether but as of now my aim is to invest 10% of my salary no matter whatever happens.Thanks subra sir.I am ready to pay the fee any time :).
I am also a trader.Trading since 2008.Now a days I trade only nifty and that too I write options. But that is separate from my investing. And the amount I trade is a something that I do not need for any need.I am 31 years of age.
Regards
Gourav
Pi
There is a saying about writing options, eat like chicken, poop like elephants. Hope people will understand why i say so.
Earlier, people used to work till 60, get a pension n live the next 10-20 years of live with modest expenses and it was usually enough to survive. Joint family also helped. What scares me massively now is seeing many smart and capable people becoming redundant in their jobs at 45-50 yrs n going to live till 75-85. Their post-retirement life could be almost as much as their entire childhood+student life+working life put together. With all the fancy lifestyle that we have gotten used to, wonder what our savings ratio ought to be for a comfortable retirement.
Abey
SIP of a lakh rupees a month at 40 yrs!!!