Retirement Planning Mistakes
It’s never too late or too early to plan your retirement. Often, it starts out with just talking about it with friends.  Retirement plans as a topic of conversation can reveal planning mistakes you’ve already made without realizing it.

According to a survey from May, 61% of people have started planning for retirement – but are they taking all the right actions?

Here’s a look at five retirement planning mistakes most people make, and how you can avoid them.

Having Bad Debt

“Bad” debt usually means unnecessary credit card expenses, or defaulting on loans. Racking up debt puts a strain on saving for your eventual retirement. For example, the loan you took out to buy your home can last you well into your retirement years, thereby eating into any funds you’ve designated as your nest egg.

How to avoid it: If you do have any kind of debt, it’s ideal that they’re paid off well before you retire. Paying an extra Php 1,000 or Php 2,000 your monthly due on credit card bills or loans can shave years off the more long-term debt that you have.

Overlooking Inflation

Inflation is a reality, but often you might think a certain amount is enough for you to retire comfortably. That isn’t always the case. It’s a mistake when you peg your retirement savings at an amount that works at the current standard of living. While the inflation rate in the country as of July is at 0.8%, the market does tend to be unpredictable. In  40 years, the Php 50,000 in expenses you have now could shoot up to over Php 80,000. It’s ideal to plan your retirement saving with the three-year inflation average in mind.

How to avoid it: Personal finance advocates like Randell Tiongson believe in using other means to grow your retirement fund and beat inflation. Investing your money and letting it grow is one way, and products like UITFs and mutual funds are perfect for starting out.

Underestimating Health Costs

As you age, the odds that you get sick increase. Most people are also genetically predisposed to certain diseases, such as diabetes. It may not seem like it now, but healthcare tends to be the more overlooked part of retirement.  Diseases like cancer tend to rack up costs upwards of Php 20,000 for a single chemotherapy session.

How to avoid it: Acquiring health insurance is ideal, and one way is to go via Philhealth. Keeping up to date with your payments on your health insurance premiums will help lower costs in the future.

Not Making Your Money Grow

You may think that savings and your SSS benefits are enough to provide for you in your retirement. This is a myth. Savings can only do so much, and this may end up drained because of other expenses.  You might believe that the money you’ve set aside for retirement is enough, which may not be the case. You’ll have more time to indulge in hobbies or other things that you missed out on, or to travel and see the world. A retirement fund built wholly on savings won’t last through this.

How to avoid it: Growing wealth can be achieved several ways such as investing or starting a small business. Both take a little time and effort, but the eventual payoff is that you’ll have less financial worries in the future. With the goal of retirement in mind, it would be ideal to learn about investing in long-term stocks or increasing your investment in UITFs and mutual funds.

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Being Indecisive

Planning retirement presents you with a lot of hard choices to make in the present so that you can live a financially secure future. Questions like “How much do I save?”, “Where do I retire?”, or “When do I retire?” can ultimately throw a wrench in any plans you can form. The odds that you retire poor are closer to 100% if you don’t take any action now.

How to avoid it: Take it all one step at a time. If you’re married and have a family, take them aside and discuss what you want to do. If you’re single, perhaps those conversations with friends or siblings can actually help you all put together those plans.

The first real mistake when it comes to planning your retirement is not planning at all. But there are others that you might not think are mistaken now – but they might be when the time comes. As much as you can make these mistakes, you can avoid them if you start planning right now.

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