Planning your retirement? AIA lists six mistakes to avoid!

Friday, 16 January 2015 00:00 - - {{hitsCtrl.values.hits}}

The beginning of a New Year is a good time to prepare for a bright future. Yes, it’s the ideal time to consider what you should keep in mind when preparing for a relaxing retirement, whatever your age! AIA Insurance takes pride in its pioneering efforts to offer the nation a pension for everyone. AIA’s farsighted tips remind you that preparing to face retirement has many hurdles that are often overlooked.

AIA in Sri Lanka Head of Marketing Suren Perera said: “Our expertise in pension products stem from the insights we have garnered through in-depth research. We have evaluated the needs of those who seek insurance solutions for a comfortable retirement. While doing so we were able to identify the common mistakes people make while planning for retirement and feel it is our responsibility to share these six mistakes for the benefit of everyone, because preparing for retirement should really begin as early as possible.” What are the big retirement planning mistakes in the AIA list? Budgeting low when in reality you’ll need more You may assume that you’ll need less money because you don’t have to spend on the daily commute, work wardrobe, lunches etc. But in reality people spend more because they face higher medical costs and tend to shop and do things they never had time for before. Not taking inflation into account Inflation is something most people don’t consider seriously, but it increases your day-to-day spending over time. Unless you have a growing income your purchasing power will decrease as costs escalate. Underestimating health care costs People are living longer and even regular dental, vision and hearing care are likely to be expensive. Non-communicable diseases are also on the rise and require costly treatment. Are you prepared for the high cost of health care you may not have experienced before? Not diversifying your investments If you are investing, you should not put all your eggs in one basket. Keep checking to evaluate whether you are getting good returns for your investments. Performance can vary dramatically and can significantly impact the size of your pension pot. Most importantly, make sure you choose a secure investment option and can get your money back. Otherwise it can significantly impact your planned retirement income. Not ensuring your spouse has power of attorney You may have assets that both partners do not have access to. What would happen if for example the husband who manages the family funds has a stroke and the wife has no access to their assets because she has no power of attorney? It’s always wise to be prepared for unforeseen eventualities. Delaying saving for retirement The longer you delay, the more it will cost for you to build the pension fund you need because you will not benefit from compounding interest. Ideally, you should have your AIA Pension Solution in place preferably, even before your 25th birthday. For details visit www.aialife.com.lk.