Hey everyone I'm Eric from the Time To Retire
channel. Now welcome back to the channel and
if you're watching this you're probably thinking
about your future and specifically a future where
you're not working anymore. Now retiring stress
-free with a sense of security and freedom well
that's the dream isn't it but the reality is
that many of us make some crucial mistakes along
the way and these can completely sabotage any
plans that we've made. Today I'm diving deep
into the biggest retirement savings pitfall and
I'm challenging myself to uncover what not to
do. Now this isn't just about saving money it's
about protecting our peace of mind and ensuring
that our golden years are golden. Now saving
for retirement is One of the most critical financial
goals we'll ever tackle. But let's be honest,
it can be complicated. I mean, we've got figuring
out what to invest in, battling to beat inflation,
trying to predict our future living costs. It's
no wonder a lot of us end up making costly mistakes.
And these mistakes can have a huge impact on
the quality of our retirement. and that could
force us to work longer or to live on far less
than we'd ever wanted to. Now the central problem
is often two -fold. We aren't saving enough or
we're making poor financial decisions and these
decisions can slowly but surely erode our savings
and the consequences of these can obviously be
quite far -reaching affecting not just our bank
account but our mental and physical well -being.
Lack of savings can actually lead to quite a
lot of stress and anxiety and this can be a terrible
burden to carry in our later years and also limits
our ability to travel, pursue our hobbies or
just spend quality time. And this can make retirement
feel more like a burden than a reward. And mistake
one, not starting early enough. So this is the
biggest of all mistakes. It's arguably the most
damaging as well, not starting early enough.
It's all about the magic of compound interest.
Obviously it's not magic, it's simple maths.
Imagine two people, Jane and Mark. Now Jane starts
saving £300 a month at age 25, but Mark waits
until he's 35, but he pays double £600 a month.
By the time they both turn 65, who do you think's
got the most money? Jane, now she started far
earlier and even though Mark saved twice as much
of a month, Jane had an extra decade of compound
growth on her side and that extra 10 years of
growth is really powerful. The sooner you start,
even with small amounts, the more time your money
has to grow and work for you. So don't wait until
that next job or promotion comes along or you
get some more stable income the best way to start
is yesterday now the second best time to start
is today so why don't we just all go and start
saving now the next one is underestimating our
expenses believe it or not expenses will automatically
decrease in retirement generally isn't true a
lot of people think well i'll be done with my
mortgage my kids will be grown i won't have to
commute and they're right these these costs will
go down but other costs can sometimes go up as
well. A single serious illness could drain significant
proportions of our savings so we're all living
longer as well which means our retirement needs
to last for longer periods of time. You'll also
have more time for leisure and travel and those
things aren't free. My advice is be realistic.
Use an online retirement calculator and play
with the numbers. Factor in a fun budget and
a buffer for any unexpected costs. It's much
better to be over prepared than under prepared.
Now mistake three is being too conservative with
your investments. Now the stock market can be
scary but being overly cautious especially in
your younger years when you're quite a long distance
from retirement can be just as dangerous as being
too risky if all your retirement money is just
sitting in low interest savings accounts it's
not growing in fact it's losing value every single
year due to inflation yeah inflation is the silent
killer of your future purchasing power it's you
know why we spend so much on a pint of milk you
know which a decade ago was kind of half the
price your investments need to at least keep
pace with inflation to maintain their value for
most of us that means having a significant proportion
of your portfolio in growth orientated assets
like stocks and mutual funds especially when
you've got decades before you're due to retire
so here's a real -life example that highlight
some of the impacts of mistakes. I was recently
talking to a couple they're in their 50s and
they've been saving diligently for retirement
but had their savings in a very conservative
portfolio they hadn't adjusted their investment
strategy for years and as a result the savings
had lost significant purchasing power. This ended
up making them delay the retirement by five years.
The story underlines the importance of regularly
reviewing and adjusting your retirement plans.
Okay, so what can we do to avoid these pitfalls?
It all comes down to being proactive and informed.
So if you can, start today, even if it's just
a small amount contributing to a retirement account
now. Automate your savings if you can so that
the money is taken out of your pay before you
even see it. But be realistic. Sit down, create
a realistic budget for retirement and consider
all the potential expenses and use some online
calculators to project what your needs might
be. And take a thoughtful approach. Don't just
blindly follow generic advice, educate yourself
on the basics of investing and choose a diversified
portfolio that aligns with your own risk tolerance
and your timeline. A financial advisor can be
great help here. By being informed and taking
control of your retirement savings you can create
a secure financial future for yourself. Now that's
the major point that I wanted to get. home today.
What would like to hear from you? I mean have
you your own experiences with retirement savourings
good or bad and what was the biggest lesson you
learned? Let us know down in the comments and
thanks for listening and I will see you on the
next one.