Top Retirement Mistakes You’ll Want to Avoid

Salaam African Bank: Avoid the Top Retirement Mistakes

Retirement is supposed to be a time of joy and relaxation. Without proper planning and decision making while still being employed, many can end up in challenges that they least expected. Here are the top five retirement mistakes.

Budgeting

Many retirees rush to retirement without  having a plan. Many simply say, “ Oh, I have money in the bank, or I might as well spend it while I’m living,” but this way of thinking leads to problems. The first thing a retiree should do is set up a budgeting plan on a month-to-month basis, but many fail to do so and go on vacation and extravagant dinners instead. Lifestyle adjustments are essential to living a retirement life stress free. Instead of eating out for every meal when retired, you should learn how to cook and plan meals on a daily budget. This goes the same for shopping and spending money on vacations. When you’re retired, your focus should shift from wants to needs. It’s important to create a budgeting plan that includes your daily/monthly costs, as well as having a plan set up in case of emergencies. This will help you avoid cost challenges in your daily life as a retiree.

Cashing Out

Many people rush to cash out their social security benefits as soon as they hit the proper age. Just because you’re retired, doesn’t mean you need to cash out your benefits right away. The problem with this could be that you’ll receive less than you are actually eligible. For example, The Finance World says that if you cash out at age 62, you’ll receive 25% less than if you cash out at age 66. If you can afford to pay your bills, then there is no need to cash out your benefits for a couple years. However, you should cash them out by age 70, because this is the age that you’ll receive maximum benefits.

Home Costs

Paying off your home before retirement is the goal for most people. If you’re retired, you shouldn’t be making monthly payments on a home you don’t already own. But you also shouldn’t be spending a lot of money on the upkeep of your home. If your home is paid off, but you find yourself still paying a lot of costs for the upkeep of your home, it may be time to sell your home and buy a smaller one. This will allow you to downsize your monthly cost and have extra cash on hand for emergencies.

Gifting Money

Holidays and birthday gifts, as well as loans are prime for losing money.  You should not be gifting or loaning money out, because you never know if you’ll actually get it back. By the time you’re retired, your friends and family should know that you are in a part of your life that you cannot financially help them. Many retirees make the mistakes of gifting cash or giving out loans, and they never see this money ever again. This is the money that you’ve worked for all your life and now must live off it, so you can’t afford to hand it away. However, having the proper budgeting plan can allow you to plan on how much you’ll spend on gifts and loans, to help avoid losing your money.

Not Staying Active

Although retirement is for relaxing, many retirees don’t stay social and active. Retirement should be about getting together with old friends and spending time with family. It is also a time that you can do anything for yourself, such as learn a new hobby, try new things, go to new places. One of the many mistakes that retirees make is becoming secluded within their lives, which could lead to depression or higher health risks.  This is terrible for the physical and mental health of humans. This is a time you should continually be feeding the mind and the body with healthy habits such as reading, socializing, and walking. You’ll live a happier and longer retirement if you do so.

Why You Should Be Saving For Retirement NOW

Salaam African Bank: Why You Should Be Saving For Retirement NOW

Why You Should Be Saving For Retirement NOW

Retirement comes last in life, and it can be tempting to put it last in your list of financial priorities as well. It can all too easy to make this mistake and put off saving for retirement when, after all, there are many major expenses in our lives that we are bound to come up against sooner than we will hit retirement. Tempting as it may be to spend money now instead of later, however, waiting too long to begin your retirement fund can be a huge regret. Here’s a few great reasons why you should start saving now, no matter where you might be in life or how long you plan to wait until retirement.

Compound Interest

This is probably the most compelling argument for saving as much as you can as early as you possibly can. Compound interest can essentially earn you the rarest of all things: free money. Any good savings account offers you interest on your contributions, and that interest then becomes part of the balance of your account, so that the next time you receive interest, it is calculated from a larger amount. Because retirement is often years away for many savers, there is a lot of time for that to add up. The interest grows at an exponential rate, meaning that even the difference between starting at age 20 vs age 25 can be a huge amount of money in your pocket a few decades don’t the line. No matter how old you are, saving now instead of next year always means more money for you when it comes time to cash out. If more money isn’t a good argument to start now, we don’t know what is!

Employer Matching

If your employer offers any kind of matching program for your retirement savings, then not saving as much as you can now is equivalent to leaving money on the table. If you have a chance for someone else to be contributing to your fund, you should take advantage of it as much as you feasibly can!

Quality of Life

You work hard to achieve a certain quality of life for you and your family, and you come to expect that your hard work pays off — as you should! It can be very difficult for people who have supported themselves for their whole lives to accept a cutback in standard of living right when they should be celebrating a lifetime of achievement. Your retirement should be a time of relaxation and congratulations, a chance to do all the things that you had to put aside in your working years. But to have the retirement you deserve, you will have to have saved sufficient funds to support yourself after work at the level you are accustomed to.

Reach the Finish Line

Another motivation for many to start saving as soon as possible is that the sooner you build up the retirement account, the sooner you can put it to good use! If you want the option of retiring early to enjoy some much-deserved free time before it’s too late, you’ll have to plan ahead and get smart about your goals. And that means saving now, as soon as you can.