New Delhi. Every person wants that his life after retirement should be carefree and peaceful. But this dream cannot be fulfilled just by thinking, for this it is necessary to invest timely and wisely. Many people ignore retirement planning at the beginning of their job and regret it later. Some people invest but face financial problems at the time of retirement due to wrong decisions. Let us know five big mistakes that most people make while planning for retirement.
Relying only on EPF
Many people believe that their EPF (Employees Provident Fund) is enough for their retirement. But, it is not entirely correct. The interest rate of EPF is decided by the government and it does not remain high all the time. Today there are many better options in the market like NPS (National Pension System) and mutual funds, which can give higher returns in the long run. If you rely only on EPF, you may face shortage of funds at the time of retirement.
Not transferring EPF on changing job
Many people do not transfer the old EPF account to the new company while changing jobs. Due to this, the old amount remains idle and interest on it stops. Remember, interest stops on EPF account which remains inactive for three years. Therefore, as soon as you change jobs, get the old EPF transferred immediately so that there is no loss of interest and your fund continues to grow.
start saving late
Often people think that this is just the beginning of their career and they will start saving later. This thinking proves to be the biggest mistake. The sooner you start investing, the more benefit you will get. For example, if you invest Rs 5,000 every month at the age of 25 and get 10 percent annual return, then by the age of 60 you can accumulate around Rs 1.9 crore. But if you start this investment at the age of 35, the amount will reduce to only Rs 65 lakh. Therefore, early start means more benefits.
Considering retirement age as only 60 years
Most people think that retirement means the age of 60, whereas now many people are choosing early retirement. If you plan from the beginning of your career, you can retire comfortably at the age of 50 or 55 and focus on other interests. Preparing early gives you both financial freedom and mental peace.
ignore inflation
Inflation is the most important aspect of retirement planning that people often forget. Today’s Rs 1 lakh will be worth only Rs 25,000 after 25 years. If you spend Rs 50,000 a month today, then after 25 years the same expenditure can reach Rs 2 lakh. Therefore, while creating a retirement fund, invest keeping inflation in mind so that your future needs can be met.
Prepare in time, otherwise you will regret it.
Preparing for retirement is not a one-day task, but a long and thoughtful process. If you want not to have to depend on anyone in old age, then avoid these five mistakes. Start investing early, choose the right option and plan according to inflation. Remember- ‘He who saves today, remains safe tomorrow.’
