Five Myth of Retirement Planning

Retirement can be understood from two aspects, financial and individual perspective. From either perspective, it is very important as part of our life. Retirement planning requires decade of discipline and rational planning to gather wealth for future life. In deed, it takes certain level of commitment to have a comfort and relax life after retirement. This includes consistence financial management and planning even you reached this phase of life. This is to ensure the saving is enough until end of you age. Plan your retirement early, be consistence, do your homework and select suitable saving tools are crucial for retirement planning.

There are a few commons misconception that most of the people reluctant to start their retirement planning early. Here are the 5 common ‘myths’ about retirement planning.

1^st myth – too dependent on the government social security planning
As employee we contribute to our retirement fund which manages by government each month. At the same time, employer will contribute another portion into the fund as well. This is part of our employment benefit. This in fact, is not enough entirely for your life after retirement. You are encouraged to save extra for your retirement.

2^nd myth - under estimate the expenses after retirement
Nowadays, most of the people don’t even know their monthly expenses monthly, not to say about retirement planning. People tend to under estimate the expenses after retirement which include groceries, property and medical expenses. Especially at this age, medical expenses are increasing each year dramatically. The medical and health care expenses are high especially when we grow older. Without additional planning, it would be difficult to enjoy beyond the minimum standard living in the golden age. In order to prevent unforeseen critical illness that will erode your retirement saving drastically, young people are advice to have an insurance policy that can cover until the end of the age.

3^rd myth – Do not have plan for retirement
Most of the citizen did not have a proper retirement plan. Hence, without a proper guidance, the retirement life could be a fragile dream. It is suggested to consult a financial planner and plan for a retirement plan policy for the sake of your future comfort. You can start with the desired life after retirement and do a backward planning.

4^th myth – Did not control the expenses after retirement
Most of the people withdrawal the retirement saving at the age of retires too quickly. It is more recommended to withdrawal the retirement amount in a moderate pace. Some even use the retirement fund to help their children to start up a new business or pay for the home loan. You need to re-consider this as it can erode your retirement saving drastically.

5^th myth – under estimate the impact of inflation
In retirement planning, if you selected a very conservative retirement tool, it will cause your retirement fund value unable to catch up with the inflation rate. Hence, your fund value will erode by yearly inflation. Inflation will cause the household expenses increase, food price surge every year. It is recommended to select the proper investment tools for your retirement planning.

Summary
Due to lack of financial planning education in early age, many people start their retirement planning late. The aging of society especially in developed country like Japan had increase burned on government to provide social needs. Start to plan your retirement early and spread the burden across time. The later you start, the more you have to pay in order to save up for retirement fund.