Be Wary of These 4 Pitfalls When Planning for Retirement

Retirement planning is a wide and risky enterprise. Do it right and your retirement years can be filled with joy, freedom and financial independence. Conversely, make one of these four mistakes, and the big, nasty financial blade could send you into the pit of regret.

Going solo

DIY retirement planning is a false economy; you should never ever take a solo flight to the venture. Instead, work with a trusted financial adviser with alternative investment market strategies to reliably chart your retirement goals and strategy.

Not convinced? Here’s something for you:

The International Longevity Centre surveyed a group of people who had retired in the years 2012–2014. The organization found out that those people who had sought financial advice were living a more peaceful retirement life with higher retirement assets and income than compared to those in similar circumstances who didn’t seek financial advice.

Playing way too safe

Risk is part and parcel of retirement planning. Every strategy and every investment carries some amount of risk. To avoid losing their life’s earning, people often play way too safe and choose investments that carry minimal risk.

The result?

They end up with lesser savings than what they need to live a financially independent life after retirement.

The takeaway: be cautious but don’t be overly cautious.

Not diversifying the investment portfolio

This is a common mistake. Quite often, people focus on picking individual stocks to keep things lighter on the monitoring and management side. The drawback of this strategy is that it leaves you vulnerable to localized market volatility.

When investing, you must always look to diversify your investment portfolio. Own stocks from different sectors, different proposition profiles (value and growth stocks) and if possible, from different countries to spread the investment risk.

Underestimating inflation

Inflation is one big black hole that can eat up your savings if you don’t plan for it or plan for it inappropriately.

Choose investment vehicles that earn you more than the rate of inflation. Equities work best in this case. Cash ISAs were once a good option too,but ever since the Great Recession, cash in the UK hasn’t fared well against inflation.

Retirement planning demands attention to detail and discipline. It’s a high-stake venture where you can’t afford to go wrong. As such, it’s worth talking to a professional when planning for your retirement.

Here at London Stone Securities, we provide best sipp provider london and comprehensive retirement consultation services and help you chart out a financially secure future. Get in touch with us today to discuss your retirement plans.

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