Retirement expert Anne Lester says there are six financial mistakes people tend to make that hamper their retirement plans. Knowing how to avoid them could help Britons not only boost their financial stability, but it could also help them take early retirement.
Most experts agree that the best way to prepare for retirement is to start as early as possible, but where some people go wrong is that they go overboard when it comes to buying. a property.
Ms Lester said that while homeownership is rewarding and can increase wealth, it is not guaranteed.
She encourages people to make sure they have enough money left for unscheduled repairs as well as some leeway for life changes like starting a family.
âHomeownership is rewarding and can lead to wealth creation, but it’s not guaranteed,â she told CNBC.com. “What is guaranteed, however, is that you will have to spend a lot more on your home than just the mortgage payment.”
Other common mistakes people make include:
- Make minimum payments on high interest debits – the faster people can pay them off, the more money they will have to spend on other financial goals.
- Being underinsured – not having life insurance could wipe out a lifetime’s savings.
- Don’t have emergency funds – it’s wise to put three to six months’ salary into an easy-to-access savings account.
- Saving for Kids Before Saving for Retirement – Saving for children’s college education before saving for retirement is a costly mistake.
When it comes to the ideal age to retire, one in four Britons (25%) would like to retire at 60.
It pays to plan well for retirement, almost a quarter of Britons who retire early are forced to return to work because they cannot afford to make ends meet.
Just under a quarter (24%) found themselves returning to work after early retirement due to financial problems.
However, Aviva research suggests that people can still take positive steps to achieve their dream of retiring early.
Paying off a mortgage early, often saving small amounts, and saving for salary increases or bonuses can all help people meet their retirement goals.
Alistair McQueen, head of savings and retirement at Aviva, said the dream of early retirement was still alive, but warned there were several factors to consider.
He added: âThe current uncertainty about the future does not make this decision easy.
âIf you aspire to retire early, it is essential that you plan your finances to be sustainable over the long term.