Friday, 23 August 2019

GUEST POST - Common Misconceptions of Retirement


We all might have an idea in mind as to what retirement will look like, but for those of us with retirement on the horizon it can be beneficial to align that imagined vision with the reality.

This article will uncover the three of the biggest myths associated with retirement and reinforce some important truths to set you on the right course for your retirement needs and goals.


Myth #1: I’ll Save for ______ Before I Save for Retirement


There is always the potential for big expenses to arise over the course of your adult life. Whether it’s your dream home coming on the market, major renovations to your place of business, or helping to pay for your child’s college education, it can be very easy to say “let me cover this expense now and save for retirement later.” The danger of this strategy is that “later” might come too late.

Saving for retirement can be accomplished through the long-term saving of small amounts of money. This means that you can often afford to both spend and save, with those small increments adding up over time into a healthy retirement account. 


Myth #2: I Can Live on Less Money Once I Retire


This myth is a tough one because technically, you can get by on less money when you retire. That being said, there are several factors that might arise to keep your costs high, including:


Unexpected Healthcare Costs


Even with great retirement options to support you, a major medical emergency or chronic condition can still result in a major cut from your retirement savings.


Lingering Children


An ever-increasing number of adult children choosing to return home after college or during the early years of their professional lives to save money, but this can end up costing you.

From higher associated daily living costs to a larger mortgage payment for a house you had hoped to downsize out of but now must keep to accommodate your “youngsters,” it can wreak havoc on your retirement planning.


Inflation and Taxes


The pressures of the overall economy can also impact your savings. Inflation can increase the cost of living. Meanwhile, some tax rates, like property taxes, can fluctuate as well. This can be particularly true if the area where you live experiences a sudden boost in demand.


Expectations


Some might say that preparing to cover 70% to 80% of what you made before retirement will be adequate. Really, though, this number needs to be adjusted for your individual needs and plans for retirement.

Are you, for example, planning on working part-time in your retirement? Then perhaps you don’t need to save as much. However, if your plan is to adopt a lifestyle with less work but with more luxury that your pre-retirement days, than you will need to develop a savings to support it.

In short, there is no set amount to have on hand; it is unique to each person’s situation.


Myth #3: I Can Always Keep Working


Often people rationalize their lackluster retirement savings by saying: “well, if it’s not enough, I can always keep working.” In theory that might sound like a solution, but it fails in practice on several levels.

First, it has been shown that many retirees don’t work for as many years as they might plan to.

Second, you cannot count on extra years of work to provide you the finances that years of incremental saving would.

Retirement is supposed to be a time where you can relax and enjoy your golden years, so don’t let it become mired in myths that might derail that dream. Take the steps to plan your savings with these truths in mind, and you can be on your way to well-supported retirement.


Contributed by: Christian Worstell
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Author Bio: Christian Worstell is a health and lifestyle writer living in Raleigh, NC.

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