Whether you are planning for retirement well ahead of time or if you are doing it when you are just about to retire in a few years, you are bound to come across some challenges. Most people do not want to give up the lifestyle that they have gotten accustomed to. This becomes the biggest challenge as after retirement your major income which is your monthly salary comes to a standstill and you’ve got to fend off with whatever you have saved over the years.
It is better to have a clear understanding of all the potential hindrances that can come your way when planning for retirement. To head into retirement without any obstacles, one must learn how to overcome the challenges that are possibly going to come in the way.
Believe it or not, everyone looks forward to retirement as this is the stage when they do not have to worry about deadlines or don’t have to please their boss. People appreciate retirement as they can finally enjoy the fruits of seeds that they have sowed over the years and focus on hobbies and their unachieved dreams.
Let us take a look at 5 retirement challenges and how one can overcome them.
Depending on conventional retirement schemes
Gone are the days when Public Provident Fund and other government backed schemes were at the top of the list for retirement planning. These days, people prefer investing in equity mutual funds or solution oriented schemes like retirement mutual funds so that they are able to build a commendable corpus in the long run. Depending on traditional investment avenues is not a good option as the interest rate offered is ridiculously low. It is true that mutual funds do not guarantee returns, but they can help you build a sustainable wealthy corpus over the long term.
Investing in multiple retirement schemes
The investment industry is flooded with retirement products, and it is quite easy for investors to get lured towards many of them. However, one should avoid the mistake of over diversification and instead invest in one of two retirement schemes that hold the potential to help them achieve a commendable retirement corpus. Investors who invest in 4-5 different retirement schemes may not be able to keep track of the progress of these investments. Instead of investing small sums across various schemes, they should invest in a maximum of two retirement schemes that have a good track record and are managed by a reputed AMC.
Only depending on Employee Provident Fund
Some investors do not invest at all in any retirement fund as their employer already has opened an EPF account where every month a portion of their salary is saved and invested. Although this is a good way to save and invest a fixed sum for your retirement, the amount that you are saving and the interest that your investments are accruing might not be sufficient for you to achieve your ultimate financial goal.
Investing in only one asset class
Traditionally Indians have been investing in debt instruments like fixed deposits, post office deposit as well in gold. However, with changing times it is necessary for us to change our investment habits as well. Investing only in debt or gold is not a good idea. Remember that it is impossible for all asset classes to perform in tandem all at once. Investors should build a portfolio with the right mix of different asset classes based on their risk appetite.
Not starting early
If you haven’t yet started planning for retirement, it is better that you do as early as possible so that your investments get more time to grow.