Last week we discussed on where one can start in planning for retirement. We did point out that three important questions have to be asked initially and throughout the retirement plan’s life: what do you need for retirement? What do you have for retirement? What can you do if you fall short of your goals?
This week, we will discuss the commonly missed retirement planning tips. If you are ready to retire or need just a bit more to help bridge the gap in your retirement funding, there might be some things you haven’t considered that can help you raise additional retirement income or otherwise help meet your retirement goals. The following are the five most commonly overlooked retirement planning issues and suggestions on how to handle them.
Borrow while the borrowing is good. Banks are fair weather friends that love to lend you money as long as you are pulling down a steady salary. After you retire though, banks become skittish when you apply for a loan because they question your ability to repay the loan without the help of a regular paycheck. So, make sure to get your borrowing out of the way before you retire.
I should be quick to warn you though, especially for my Malawian friends in diaspora, that unlike banks, credit card companies will continue to encourage you to take on more debt than you can handle even if you are nearing retirement. However, you must resist the temptation to increase your level of credit card debt just before retirement.
Carrying a large unpaid loan balance from month to month causes a big strain on a person’s financial resources even when the person is fully employed. That strain only increases after you retire and are no longer earning a paycheck.
A penny saved is a penny earned. Prior to retirement, find out the best way for you to invest the money from your company retirement plan. Taking the money and hiding it in your mattress or in a savings account earning circa 4% interest each year are not good options. Instead, consider transferring your company retirement plan money into a portfolio of assets that offers you higher returns. For example, buying a stocks/shares and investing in property could get you into high rewarding passive investments.
Don’t get caught without adequate health insurance. Part of the price you pay for retirement is that you will have to give up company-provided benefits, like health insurance in some instances, when you retire. The loss of company-provided health insurance is a major loss especially if you are getting into an advanced age that requires more medical attention. If you have a spouse that is still employed, see if you can be included in his or her employer’s plan. Otherwise, you are going to have to do some homework and find (and pay for) your own health insurance policy. The alternative of not having medical insurance is even costlier if you develop health problems. To find out what insurance works best for you, you really have to weigh the costs and benefits to you with each type of insurance.
Blessed week-end to you and yours, as you consider these well-known but often neglected retirement planning tips.