Retirement is an inevitable stage in life, so for many investors, retirement planning is crucial.
But as many investors have found out, there are a handful of common mistakes you could make when planning for your retirement, which could have a significant impact on your wealth.
Here Are Five Important Retirement Planning Mistakes To Avoid
We’ve put together the top five retirement planning mistakes to avoid, showing exactly how one can achieve this.
1. Leaving Your Retirement Planning Too Late
The first and potentially most common mistake when it comes to retirement planning is leaving it too late. Many investors have the wrong idea that you should only plan for retirement when you’re nearing your retirement age.
The truth is, that planning early on for the future can enable you to adequately prepare your finances and have a better chance of achieving all your financial goals.
The earlier you know your targets, the more time you have to plan out the steps you need to reach them, giving you more time to build your wealth with your retirement goals in mind.
2. Not Seeking Professional Advice
Another mistake to avoid when retirement planning is thinking you need to do it entirely on your own. Whilst this is an option, it can often be beneficial to seek expert advice from a financial professional.
This can provide you with tailored guidance for your financial situation. Your adviser will analyze your income as well as discuss your goals, to gain a clearer idea of what your requirements are.
They can also address any personal concerns or challenges you might be facing with your retirement, to give you more financial confidence in your plan.
3. Being Uninvolved With Your Investments
Some investors might be unaware of how their pension is being invested, or choose to be uninvolved, and this could mean you’re not maximizing your savings as much as you could be.
We recommend finding a wealth management service that offers a range of portfolios with different risk levels. This can give you more opportunities to find suitable investments that align with your future goals, as well as your financial situation.
You may also be able to access wealth-building tools that allow you to monitor and control all your investments, for a firmer grasp on your retirement wealth.
4. Falling For Pension Scams
There has been an increase in pension fraud in recent years, which is why it’s more important than ever to make sure you don’t fall victim to any scams.
There are a few things you can look for when it comes to pension scam activity, such as:
- Certain language – ‘liberate your pension’, ‘obtain a pension loan’, ‘use an early-access loophole’, ‘obtain a savings advance’, etc.
- Promises of guaranteed higher investment returns and/or high rates of income through suspicious schemes.
- Offers of early access to pension savings before age 55 without highlighting the significant HMRC tax bill that may result.
- Use of pressurizing tactics, such as sending couriers to victims to obtain necessary signatures
As always, make sure you only communicate with your modern wealth manager regarding your pension investments and check with them if you’re unsure about the legitimacy of anything.
5. Not Building A Flexible Plan
An important mistake to avoid when pension planning is not having a flexible plan.
This means ensuring you can review and adjust your plan to navigate any impacts on your wealth, if and when they occur.
With ongoing advice from your adviser, you can monitor things such as changes in the markets or tax rates, as well as any changes in your lifestyle – i.e., new retirement goals, additional dependents, etc.
You can make sure your plan is continuously on target for all your future goals, giving you the right approach as your financial situation evolves.
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With this information, you’ll now be better equipped to identify and avoid these unfortunate pitfalls that many investors fall into when planning for retirement. If you’re ever unsure of what to do, contact your modern wealth manager to gain expert guidance on what approach is best suited for your financial situation.
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