Reasons for a quick depletion of retirement corpus
Everyone knows that the whole purpose of accumulating retire corpus is to make your money outlast you rather than the other way around. Retirement is not the right time to realize that you are running out of money. This situation can be avoided by careful spending, withdrawing, and saving. Although everyone's planning is unique and depends on their situations, there are some universal reasons for the quick draining of retirement funds. Here are some of the reasons listed below for your understanding:
High withdrawal rate
You might have accumulated a handsome corpus via your investment in Employee Provident Fund (EPF), Public Provident Fund (PPF), Mutual Funds, etc; however, too many withdrawals can make your corpus drain sooner than planned and its pace would be so quick that you might outlast it. Higher than permissible limits of withdrawal might lead to such a situation. To avoid this, either you should spend less in retirement or have a sizable retirement corpus for much a higher withdrawal rate. It is always prudent that one should calculate retirement corpus based on the lifestyle one wishes to have during one's retirement and not just based on one's current lifestyle.
Debt
One should avoid taking a debt during retirement, unless it is inevitable. Most of the experts believe that one should clear out most of the debt way before retirement. Although there are chances that you might need to take debt. the reason for the same can be poor retirement planning or a huge emergency. The interest cost is something, which will eat up your corpus a lot. Hence, it is always better to avoid getting into debt during your retirement period. Even if you have to take a loan, it should be well planned.
Retirement plan
The lack of planning often leads to undesirable results, whereas, a well-planned thing often gives somewhat predictable results. Hence, not having a retirement plan in place is also one of the major reasons for the quick depletion of retirement corpus as nothing is happening in a well-planned fashion. So, this can be avoided by having a proper retirement distribution plan in place that would help you to understand how to go about spending, withdrawing, and saving money in the retirement phase.