Most people do not have enough money to maintain their standard of living when they retire, and they are faced with a choice between continuing to work or adapting their lifestyle. There are a number of things that can contribute to you finding yourself in this position.
1. Lack of proper planning:
It is very important to review and adjust your financial plan and goals regularly.
2. Longevity:
We live longer than our parents, so will probably have more retirement years, which means we will need more money when we retire.
3. The retirement gap:
There is usually a shortfall between the benefits of an employer-sponsored pension savings scheme and what you need to
retire on.
4. Healthcare costs:
Medical inflation is higher than ordinary inflation, and high medical costs can be expected after retirement.
5. Non-preservation:
The worst mistake you can make is to spend your retirement payout when you change jobs. Reinvest it so that it will remain part of your retirement plan.
6. Early retirement/retrenchment:
Taking early retirement or retrenchment packages five years before normal retirement means you have to add five years to your retirement years and subtract five years from your retirement savings!
7. Too little, too late:
Self-employed people leave saving for their retirement too late. This results in too little capital being accumulated for a comfortable retirement.
8. Poor investment decisions:
Making poor investment decisions when investing your retirement savings and capital can undo the work of a lifetime. Be especially careful of investment scams that target senior citizens.
9. Increased incidence of life-threatening illness:
Although it depends on the type of fund, an increasing proportion of retirement fund contributions goes to fund death and disability benefits, and less goes towards the investment portion. Your retirement scheme will therefore grow more slowly than expected - and you have to make up for it by putting away a little more each month for your old age.