Don’t Detour on the Way to Retirement

Saving for retirement, particularly for young workers, maybe a really hard thing to get your head around. It can also be a strenuous exercise for your wallet. First off, retirement feels like it’s a million miles away. A beginner worker’s salary may not be too high, and besides, there’s student debt and maybe a car loan that you’re working on paying off. Everyone wants to enjoy their youth too, and that also costs money.

However, many a miserable old-age experience has shown that it’s well worth saving for retirement while you’re young. Building a sizeable nest egg becomes very difficult if you don’t start the retirement-saving habit early.

With decades ahead of you before retirement, you’ve got lots of time to let your savings grow. Thanks to these many potential years to establish your nest egg, putting aside money each month is relatively affordable.

However, if you squander this time, or detour off the beaten path of a retirement saving routine, you could be in trouble when you approach your 60s. Watch out for some snags you may encounter along the way.

Common Missteps on the Way to Retirement

Detour #1: You are a Spender

Most people see retirement as a far-off event that will not happen anytime soon. Others envision a future in which they’ll be earning a six-digit salary and can pour some money into savings to compensate for the years when they put no money aside.

But let’s be real: If you cannot save the little you have now, how will you be able to save when you have plenty of money? Studies show that there is a perfect correlation between income and spending. In layman terms, your level of spending increases with an increase in income.

How does spending affect your retirement savings? When pondering any big purchase, you should simultaneously envision the future. Suppose you want to buy a 75” screen that costs $ 6,000. Does that jive with saving for your retirement goal? Instead, you could buy a 65” screen of the same model – which will give you the same result – which costs $ 4,000.

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Then you can bank the $ 2,000 into that retirement fund. Such a decision can only be made based on the premise that “all money is retirement money”. The one escape route from this spending trap is to control your level of spending and always prioritise saving for retirement above spending.

Detour #2: Not Getting the Right Advice

With all the amazing retirement advice available out there, wouldn’t it be great to get the help of a retirement planner? Yes, it sure would. Certified Financial Planners can offer very good advice on all your retirement queries. Financial planners can take on a role as retirement advisors. Certified Financial Planners can assist you with all your retirement issues.

Retirement Traps : Common Missteps on the Way to Retirement

However, an advisor who focuses only on growing your money may not be of great help. Temptations to spend your hard-saved retirement money will always hound you. The best financial planner is the one who will factor in both your financial and emotional situations.

Get an advisor who will fully understand your risk tolerance. An insightful advisor can save you from making mistakes that might prove to be very costly in the future.

A good financial advisor can help enhance your retirement preparedness and align your retirement expectations with reality. He or she can help you understand how Social Security can fit in with your retirement income plans.

Those who have sought the services of a financial planner express confidence that their personal investment and retirement plan will provide the income level they expect in retirement.

Detour #3: You are Overinvesting in Your Home

Your home is a solid investment. However, taking on the responsibility of a mortgage can be a very sobering experience. You would certainly be borrowing more than you ever had before and the interest you pay over the long term will add up to thousands of dollars. Some people make the mistake of sacrificing their retirement savings to pay off the mortgage.

At first, it may not seem like a bad idea. Buying a house in one’s early years and paying off the loan before saving for retirement. But this is where many people go wrong. They forget that the longer you invest, the more their money grows due to the compounding principle.

If you delay saving for retirement in order to pay off the mortgage, you will be losing valuable time that you will never be able to recover. Even if you increase contributions to your account, you won’t be able to make up for the time that you were not saving. To be on the safe side, saving for retirement should always come before paying off the mortgage.

In addition, overspending on renovations that might not add value in real terms is irrational. This will swallow up funds which could have been saved for retirement

How you plan for retirement is one of the most fundamental decisions you’ll ever make, and the stakes couldn’t be higher. If you do it right, your golden years will be full of freedom, joy and financial independence.

Retirement Mistakes To Avoid During Financial Planning

The crucial point to realise in your youth is that you have to do it right from the very start because you don’t get a second chance once you hit retirement age. It’s highly recommended that you retain a retirement advisor from the earliest days of your professional life so as to align your savings plan with your retirement expectations.

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Founder @ The New Savvy
Anna Haotanto is the Advisor (former CEO) of The New Savvy. She is currently the COO of ABZD Capital and the CMO of Gourmet Food Holdings, an investment firm focusing on opportunities in the global F&B industry. She is part of the founding committee of the Singapore FinTech Association and heads the Women In FinTech and Partnership Committee. Anna is the President of the Singapore Management University Women Alumni. Anna invests and sits on the board of a few startups. Anna is also part of the Singapore Chinese Chamber of Commerce & Industry Career Women’s Group executive committee. Anna’s story is featured on Millionaire Minds on Channel NewsAsia. She hosts TV shows and events, namely for Channel NewsAsia’s “The Millennial Investor” and “Challenge Tomorrow”, a FinTech documentary. Anna was awarded “Her Times Youth Award” at the Rising50 Women Empowerment Gala, organised by the Indonesian Embassy of Singapore. The award was presented by His Excellency Ngurah Swajaya. She was also awarded Founder of the Year for ASEAN Rice Bowl Startup Awards. She was also awarded the Women Empowerment Award by the Asian Business & Social Forum. Anna has been awarded LinkedIn Power Profiles for founders (2018, 2017), Tatler Gen T, The Peak’s Trailblazers under 40 and a nominee for the Women of The Future award by Aviva


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