Retirement planning is an important aspect of financial management that guarantees a secure and stable future. When you can no longer work and earn, you must not only save but also invest wisely to create returns. However, many people make simple blunders that affect their retirement plans. To deal with this, one should plan early to realise your goals.

Sailesh Mishra, founding president of Silver Innings, a non-profit organisation that provides need based services to senior citizens and their family, says: “The shift from joint to nuclear families and longer lifespan has significant challenges for seniors, with fewer family members available to provide support and a lack of a universal pension system, high healthcare costs, inflation, and inadequate financial literacy. It’s crucial to start retirement planning early. Financial planning should begin in your 30s, focusing on pensions, health insurance, diversified investments, and financial literacy to ensure a secure retirement.”

Also Read: Retirement Planning: Key Strategies To Maximise Portfolio Growth

Here are five retirement planning mistakes that everyone should avoid:

1. Overspending

Retirement often brings more free time, which may prompt you to overspend on travel, hobbies or other activities. Even though you no longer have work-related expenses, spending on new activities can quickly burn a hole in your pocket. You can avoid it by developing a budget for essential needs and lifestyle spending. You could adjust both as needed.

2. Retiring Too Soon

Retiring at a young age can impact your income and lifestyle. Early retirement may result in a lower financial corpus to meet your expenses. Also, retiring sooner will leave you with inadequate funds to deal with inflation and emergencies. To avoid these risks, plan carefully before deciding on early retirement. Ensure you have sufficient savings and investments to support your desired lifestyle throughout retirement.

3. Depending On EPF Alone

Many people focus on the Employees Provident Fund (EPF) for retirement savings and overlook other products. While EPF provides a steady rate, it is considered a conservative investment instrument and may not be enough to address inflation or meet all your retirement needs. To avoid this, diversify your retirement assets. Consider investing in other options such as mutual funds, equities, and long-term fixed deposits. This strategy can help you build wealth and diversify risk, resulting in a safer and bigger retirement fund.

4. Not Having The Right Investment Plan

Choosing investing strategies that will provide strong returns at retirement is essential to successful retirement planning. Your long-term financial stability may be impacted if you make poor investing decisions, resulting in insufficient growth of your savings. You may risk missing out on important opportunities or taking needless risks if your portfolio isn’t well-diversified. To avoid this, research various investment options and assess which ones align with your financial goals and risk tolerance. Ensure it remains suitable for your retirement needs.

5. Neglecting Inflation

Inflation can gradually reduce the purchasing power of your retirement savings. Many retirees overlook this factor, leading to a potential shortfall in funds as living costs rise. To avoid this, work with your financial advisor to create a personalised strategy for investments and retirement income to help you maintain your purchasing power over time.

Sailesh adds, “Seniors in India should adopt good habits to avoid running out of money during retirement, including keeping a budget and following it, saving for emergencies, regularly reviewing investments, getting tax planning help from a CA (chartered accountant), avoid excessive credit card use, plan loan payments, consider part-time work or consultancy, stay socially active, get regular health checkups, and avoid unnecessary online shopping.”