They say that money doesn’t bring you happiness and we are absolute advocates of this. At the same time, without sufficient sums during retirement, life can take a dramatic downturn.
Unfortunately, the media is starting to present a lot of stories of recently retired people simply not having enough money to maintain their standard of life. Or, they are presenting stories which talk about how very few pensions are going to keep a lot of us going when we do reach the elusive retirement age (whatever that might be).
To try and safeguard you from the above scenario, today’s post has been put together. We will now take a look at four of the classic mistakes which tend to blight people who are retiring and what you can do to stop them.
You don’t think about the bigger picture
This is a huge mistake that a lot of people who have one eye on retirement make. They know their expenses and income now – and they’re in a relatively healthy position.
The problem is, they don’t open their eyes and realize that this isn’t going to remain constant forever. Once you retire, your income tends to decline, but more importantly new expenses come into the picture which are usually not budgeted for.
Some of these might catch you by surprise, for example:
- How much is your funeral going to cost? It might be a long time away, but it probably needs paying for in advance.
- What about the elderly care fees? Little else needs to be said here; the media have made no secret about the fact that the cost of such care is a worldwide problem.
- What about the grandchildren? You’ve paid for your children, but due to the state of the economy, you now may now feel obliged to contribute for the grandkids as well.
In truth, the list could go on, but hopefully you understand the angle we are approaching this from.
You don’t realize that more disposable time = more money spent
Another common mistake made by many is that they immediately think that they will spend less in their retirement era. As it turns out, the opposite will probably occur. Let’s not forget that you now have more time available and this equals more time to spend money. It might be on hobbies, petrol or even food, but don’t for a minute think that your day-to-day costs will dwindle.
You don’t live within your means before reaching retirement
Out of everything we have discussed so far, this is the mistake that you can rectify in the here and now. A lot of people think they are living within their means as they are not heading into debt. However, they don’t stop and think about whether or not they are putting away enough money for later life.
As such, now is the time to change such an approach. If you think you are doing OK financially, ask yourself if there is any capacity to contribute to your pension pot or other investments. If there isn’t, you’re probably living beyond your needs and something needs to change sooner rather than later.