Retirement is a time to relax and enjoy the labour of your active days at work. However, this will be a mirage if there are no intentional financial plans to ensure a meaningful retirement. Profligate lifestyle and impulse purchase are some of the bad financial decisions that will endanger your retirement plans. Here are some of the fiscal pitfalls you should avoid.
*Extravagant lifestyle – living beyond your means is a sure way of eating all that is meant for tomorrow today. If you want to retire well, make effort to cut down on expensive lifestyle. It is expedient to be prudent with your income during your active years so that you will relax and enjoy your days in retirement. Reduce the frequency of the luxurious holiday trips; shun the urge to change your car frequently to the newest model, it is better to use a moderate car now than buying an expensive one then have no fund to afford any during your retirement. The key issue here is to be moderate with the expenses so that you can still enjoy a good life afterward without depending on your children or relatives.
*Outrageous level of debt – Being in debt is not a bad situation at all; it is just the reason for incurring the debt that makes all the difference. Endeavour to take loans for basic necessities of life such as purchasing a house or paying for tuition. Loans should not be taken to finance an extravagant lifestyle such as vacation trips, state of the art electronic gadgets, expensive cars etc. Ensure that you resist the enticement to take too much loan that will stretch you financially and endanger your retirement plans.
*Negligible loan payments – the longer it takes you to pay a loan, the more interest you will have to pay. The fact that you have the opportunity to pay a mortgage for 30 years should not deceive you into believing that you have time, why not consider paying it in 20 years and realise how much will save on interest. Paying off a loan earlier than the tenor gives you the prospect of effectively planning your investments and savings especially for your retirement.
*Low income earning – if you are easily content with low income during your active years at work, you are likely to run into financial trouble during your retirement. You should ask for raise periodically with informed basis for your request. If your request is turned down often, it may then be the time to move on. You may also need to add another job or engage in some kind of consultancy. Think of improving your skill on the job so as to enhance your capacity for higher earning. Seek all the legal and ethical means to get more income; it will pay off during your retirement days.
A worthwhile retirement is a function of meticulous planning and the willingness to be disciplined to go through with the plans. You may also need to engage trusted friends and family members to hold you accountable to your retirement financial goals.