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9 Retirement Planning Myths Everyone Should Know
The concept of retirement works differently for different people, as does their retirement planning. However, everyone must plan this period ahead of time to avoid crisis and financial dependency post-work life.
Speaking of which, several retirement planning myths revolve around the concept. This article will shed light on the most commonly believed retirement myths to dismiss them so that you reach your future goals conveniently and enjoy this phase of life instead of only enduring it.
Debunking Top 9 Myths about Retirement Planning
Myth #1: Retirement Planning Can Wait Until You Are Older
This is a common misconception that people tend to believe. However, the truth is starting early is the key to successful retirement planning. The earlier you start, the more time you will have to build wealth through savings, investments and compound interest.Myth #2: Only People With High Income Can Afford to Save For Retirement
Another common myth is that people believe only high-income individuals can save enough money. However, retirement planning is essential for everyone, irrespective of income level. Therefore, if your monthly income is low, you can make a smaller contribution towards retirement savings that can accumulate significantly over the years.Myth #3: My children Will take care of You During Retirement
While it is natural to expect some support from your children in the future, you must also have a retirement plan independently. Financial dependency can result in uncertainty. Therefore, you do not want to burden your children with financial responsibilities, and there is no assurance that they can provide support even if they wish to.Myth #4: Real estate Is the Best Investment For Retirement Planning
Real estate can be a profitable and popular investment option, but it cannot serve as an efficient wealth-building tool. Therefore, solely depending on real estate would not be a wise choice. Instead, a diversified portfolio, which includes investments in stocks, bonds, and mutual funds, can provide higher returns in the long run while minimising the investment risk.Myth #5: I Can Use My Retirement Fund Now and Save Later
It is a common misconception to think that you will have enough opportunity or time to save enough for retirement after exhausting your retirement fund. Moreover, with the changing job market and economic conditions, pension plans alone may not provide enough for retirement.
Even if you have financial responsibilities such as funding a child's education or marriage, seeking a loan will be safer than withdrawing a chunk from your retirement.
Myth #6: It Is Too Late to Start Retirement Planning in the40s
If you haven't been saving for retirement until now, you may think it is too late to start saving now. But as they say, it is better late than never. So, while starting early is wise, starting your retirement planning is never too late.
You can look for a pension plan with high equity investments and returns. You can also get a life insurance plan that will offer both protection and a stable income post-retirement.
Myth #7: I Will Spend Less Money During Retirement.
Retirement may result in a reduction in certain expenditures, such as those connected to employment. However, as the cost of living increases yearly, failure to improve your income Therefore, it is important to consider these costs while making plans to maintain financial security in the old life.Myth #8: My Inheritance Will Sufficiently Cover the Expenses
Your inheritance may or may not be sufficient depending on the kind and amount of the asset. Therefore, relying solely on an inheritance to cover retirement expenses is a common misconception and mistake.
Moreover, unexpected taxes and fees sometimes apply to inheritances, which can drastically diminish the amount of money received. It is important to develop a thorough retirement plan incorporating various income streams and accounting for unforeseen costs to maintain financial security in retirement.
Myth #9: Market Investments Are Too Risky
You may believe that you cannot risk your savings in market investments for retirement as they pose risks. However, many plans, such as ULIPs, can offer a solution by letting you select funds according to your risk appetite and goals. So, by investing in a combination of high, medium, and low-risk funds, individuals can earn returns while minimising risk.FAQs About Retirement Planning Myths
What are the three most common mistakes in retirement planning?
What do the "3 R's" of retirement stand for?
Is retirement planning just investing?
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Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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