In the wake of COVID 19, most people have quit the idea of early retirement. Other than retirement apprehensions, many other issues and problems need to be addressed to show good results out of your investment plan. Sometimes, employees commit such a mistake that it creates financial issues for you after your retirement.
Let’s take a look at these commonly repeated mistakes that can lead your saving plans to the dead end.
Five things that you need to avoid for having good results out of your investment plan:
#1. Waiting too long to get yourself indulged in investing:
This is a common mistake that’s committed by a lot of the investors seeking to have the fruit at the end of their employee-ship tenure. Employees set a targeted amount in their mind that they want to see at the end of retirement and start summing up money for that targeted amount without investing. What happens is that when they reach the targeted amount to start their savings plan, it’s too late to invest.
For example, if you invest $2000 at the age of thirty, your lump sum might touch the figure of $75000 when you reach the age of sixty. On the other hand, if you have invested the same $2000 ten years before, your lump sum might have touched the figure of $237,000. Yes, you are reading it right.
That’s why it’s crucial to start investing as soon as possible, as it can offer much more than you expect. If you wait, you might leave a lot of money on the table.
#2. You invest too less for your retirement plans:
This is one of the most prominent problems found amid most of the investors. When it comes to investing in retirement plans, they become extra-conscious about the percentage they have to invest in their retirement plan from their salary. In this scenario, most people prefer to spend money on things that have nothing to do with your financial future. People don’t hesitate to plan vacations, but they become too careful when it comes to investing in their retirement plan.
Of course, you need to spend some money on your recreational activities, but bear in mind your end goal is to save enough money for retirement. Try to invest as much money as you can in your retirement plan, as this is the sole resource of income for your financial career after retirement.
Try to minimize extra expenses, and pour that money into your retirement plan. It’s the only way to secure your retired life from the menace of financial problems.
#3. You don’t invest for retirement:
You may have come across people that live their lives on the meager amount paid to them in the form of Social Security. Social security is only $1230, which isn’t nearly enough to live a comfortable life. According to a study presented by Deloitte Center for Financial Services, 60% of pre-retirees’ people that have no financial plan for retirement, and 20% of them plan on relying strictly on social security.
Having something in hand is much better than having nothing, so start saving now; otherwise, you will face significant problems when you retire.
A severe economic crisis erupted due to COVID 19, and imagine living without significant money that could fill multiple needs. It’s still not too late to get yourself associated with any retirement savings plans.
#4. Early withdraws from your saving plans:
Whether you go with the TSP saving plans, annuities, or a 401(K), you are restricted from the early withdrawal of money from your account. But, still, some people commit this mistake and lose the real essence of their saving plan. Albeit, in the wake of COVID 19, Senate has approved the bill that allows you to take early withdraws of money from your account, but these are timely provisions that have been issued, keeping in view the harsh economic conditions, and these will be uplifted once the recession is over. For the time being, this act will be of no concern, but you’ll have to make up for it later on.
Companies will impose a fine of 10% of the money that you withdraw from your savings account, and this fine decreases gradually as you withdraw money for the second and third time. So, if you want to have the full-fledged benefit of your retirement, try to manage situations with money that you have in your hand.
#5. Most of the people invest without proper consultation:
Most people decide on their investment plan based on the so-called advice given by their friends and colleagues. But none of them are qualified to provide this advice, so please don’t go with the option that your friend chooses, as they might have different circumstances, and a financial planner will know all of your options.
The selection of the investment plan depends upon many circumstances, and what you want out of your investment plan. Consult with a qualified financial advisor that will lead you down the right path.
Final Words:Having gone through this article, you will be well-convinced about the veracity of claims that we raised at the start of this post. Multiple factors are involved in determining the success of your retirement savings plans, and the most important of them have been mentioned here. The situation might be a little different from the pandemic of Corona Virus, but these are the things that need to be taken care of before it’s too late.
