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3 Mistakes To Avoid While Planning For Your Retirement

Published On Jun 30, 2021 11:00 AM By InsuranceDekho

The retirement period is a blissful time to indulge in leisurely activities like traveling, socializing, reading etc. Thus, it is essential to plan your retirement smartly to enjoy your old age without worrying about the money. A life insurance policy can help you achieve the goal by providing a financial cushion of income generation through regular pensions after your retirement. This way, you won’t have to depend on your children, friends, and relatives even for your day-to-day expenses. Read on to know about 3 mistakes that must be avoided while purchasing a life insurance policy to plan your retirement.

3 Mistakes To Avoid While Planning For Your Retirement

Here is the list of 3 mistakes you should avoid making while planning for your retirement. 

1. Late Planning

People in their prime age often make the mistake of delaying their retirement planning as it may seem like a far-fetched idea to them. However, it is advisable to start planning for your retirement as early as possible to get a sufficient corpus through compounding. Moreover, investing in a retirement plan at a young age will help you get a suitable plan at lower premium prices, ultimately leading to maximized returns.

2. Wrong Evaluation of Budget

Suppose your plan only has money to support you for 10 years after your retirement, but you will still have 10 more years ahead of you. In this case, the life assured would have to take help from his/her children or friends when the plan gets exhausted. Thus, it is crucial to estimate the retirement corpus you will need to maintain your current lifestyle even after retirement to help decide the retirement plan. The amount can be calculated after considering your personal and professional goals and future aspirations. 

3. Neglecting Inflation Rates

Another mistake that should be avoided while purchasing a life insurance policy for your retirement planning is the neglect of the inflation rate. It is essential to note that the money you saved today might not be enough for the long-term if you don’t consider the rate of inflation. Hence, you can invest in a plan that offers more than 6% yearly returns to beat inflation. It would help if you also prepared for taxes that will be implemented on your savings. Here, you can consider investing in ULIPs as they provide exceptional tax benefits. 

Take Away

The importance of time must be understood to start planning for your retirement early and reap maximum benefits while living a comfortable life. Moreover, it would help if you calculated the liabilities you might have after retirement to have an efficient corpus. These can include your old parents, young children or grandchildren or moving costs if you move into a new house. You can even consult an insurance agent or a financial advisor to help compare different policies and choose the best plan at affordable prices. 

Must Read: How to Use Life Insurance for Retirement Planning?

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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