3 Common Retirement Mistakes
Given that you’ve never retired before, it’s easy to see why people make mistakes. It’s not something you do every day. Not only that, but you likely are so busy working and taking care of the family that you haven’t had the time to plan for the golden years.
To help you get the most out of the retirement years, learn from others’ mistakes and use the tips for how to avoid the common errors.
1. The “I’ll Die Young Anyway” Mentality
Some people assume they won’t make it to retirement age. Whether they have a health issue in the family, have led a hard lifestyle, or for another reason, they assume their life won’t take them into old age.
But the reality is that you could live longer than expected. In the UK, life expectancy at age 65 years was estimated at 18 years for males and 21 years for females, based on recent data from the Office for National Statistics (ONS).
Furthermore, the ONS estimates one in five men will reach age 90, while one in three women will reach that same birthday. Thus, it’s important to understand that you could outlive your money and more reason to start putting money into your pension now.
2. SIPP Mistakes
Investing in a Self Invested Personal Pension (SIPP) provides you with a large amount of flexibility regarding investments and products. But a common error is choosing investments that don’t make sense, even though there are tax benefits.
Unfortunately, if you make investments based on a financial advisor rather than a SIPP company, your capital can be put into risky accounts, and you might lose some or all your pension fund. If you find yourself with a mis-sold sipp pension, file a claim to see what you are entitled to, depending on your situation, rather than missing out.
3. Thinking Your House is Your Pension
A common way of looking at homeownership is that when it comes time to retire, they will sell their home. The reasoning is that they will then live off the profits for their golden years.
While that makes sense in theory, it doesn’t account for any fluctuations to the housing market. Unfortunately, the coronavirus is already starting to affect economies around the world, and it could negatively affect property confidence.
Furthermore, people may find themselves unable to get a mortgage repayment if their income dipped during the COVID-19 pandemic. If they were counting on a future house sale to cover their retirement years, they might have struggles before then. Exactly how the pandemic will affect the UK property market is an ongoing debate.
Final Words on Smart Investing
Hopefully avoiding the mistakes above can help you understand how to be smart about investments and boost your savings account so that you can enjoy a comfortable retirement. Begin now to educate yourself about money and investing, making use of free resources available online and asking those whom you trust most for advice as needed.
Financial literacy is something you can teach yourself, yes. But learning from the experiences and common retirement mistakes of others can save you a lot of headaches and money in the future.