5 mistakes that destroy our post-retirement dream

We wish to spend our retirement life comfortably and not be a burden on our children, but the plan doesn’t go as well as we expected. What are the reasons? Today, ACU PAY will introduce you to 5 mistakes that should not be made if you do not want to destroy your post-retirement plan.

1.Working so hard that one forgot to plan for finances

Many people still have the idea that financial planning is not important or have the thought that there is plenty of time to work and gradually save money. In fact, being too busy working until you forget to systematically plan your finances, start planning too late, or think only of happiness and comfort right now, is a warning sign that you are stepping into the trap of destroying your retirement plans.

2.Little amount of savings

When planning after retirement, it is necessary to calculate the expenses that will be spent monthly in retirement age. However, the problem many people face is that they under-calculate their retirement savings, which runs out before time. The advice to have sufficient retirement funds is to look at how you want to live your life after retirement and how many more years you will spend money after retirement.

For example, we want to have 15,000 baht per month to spend for another 20 years after retirement, so we should have around 3.6 million baht (15,000 x 12 x 20) and calculate the percentage of inflation that may occur, then calculate how much these savings will be by the time we retire, and compare whether our savings or investments are sufficient to reach retirement saving goals or not

3.Invest one's retirement assets in small quantities

The following examples are some of the recommendations for calculating retirement asset allocation from SET.

  • Can take a low risk Should focus on investment in highly liquid assets with a focus on deposits (40 %), bonds (45 %), and the rest on stocks (15%).
  • Can take a medium risk Should invest in stable assets and generate stable income by focusing on deposits (30%), bonds (50%), and the rest on stocks (20%).
  • Can take a high risk Should invest in stable assets, generate stable income, and increase long-term savings by focusing on deposits (20 %), bonds (45 %), and the rest on stocks (35 %).

We may adjust our investments to suit ourselves and the expected returns. Sometimes, if we think that we may live long, we have to invest more in higher-risk assets.

4.Hope to rely solely on pensions, provisions, or old age allowance

If you look at the retirement allowance in Thailand, starting at age 60, you will get a minimum monthly allowance of 600 – 1,000 baht, which is very little. Many people are counting on provident funds, which are deducted from their employer’s salary and contribution throughout their lifetime.

A survey by the Securities and Exchange Commission (SEC) in 2017 showed that 50% of provident fund members had less than 1 million baht. In fact, we should have at least 2-3 million baht in retirement savings. If we wait for this money and rising inflation, which is certainly not enough for retirement.

5.Forget to think about inflation

Many people plan their retirement well but forget to think about inflation and rising currencies in line with future economic conditions by at least 1-3% per year, making money savings inadequate to spend. Therefore, before saving retirement funds, it is recommended to calculate the inflation rate or use the program to calculate the inflation which will help to clarify the overall preparation of retirement funds.

Retirement planning is something that is very close to us, so we should make financial preparations for a stable and appropriate retirement life. The sooner you start, the better. So are you planning for retirement today?

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