Retirement. Just the word probably has you daydreaming about beachy sunsets, globe-trotting adventures, and finally having time to pursue all your hobbies. But before you can make that Tuscan villa fantasy a reality, you’ve got to tackle retirement planning.
All the talk of retirement accounts, investment strategies, and savings plans? It can feel like a total mind puzzle. No wonder so many people get overwhelmed!
Here’s the good news though: A lot of that fear and confusion comes from listening to common retirement myths. Let’s bust through some of the biggest ones so you can get on the right track toward an awesome, secure retirement.
1. Social Security will take care of everything
Social Security is a fantastic safety net, but it’s not designed to be your sole source of retirement income in retirement. The average Social Security benefit only replaces about 40% of your pre-retirement income. That means you’ll need to have other sources of income, like retirement savings and investments, to maintain your desired lifestyle.
2. I’m too young to start saving for retirement
This is a myth that can cost you dearly. The power of compound interest is real. The sooner you start saving, even small amounts, the more time your money has to grow in your retirement savings account. Even if you can only contribute a few hundred dollars a month, starting early can make a huge difference in your retirement nest egg.
3. Saving for retirement means sacrificing everything else
Retirement planning isn’t about depriving yourself of all the fun stuff today. It’s about striking a balance. Create a budget that allows you to save for the future while still enjoying your life now. Look for ways to cut back on unnecessary expenses and find free or low-cost ways to have fun.
4. I’ll figure it out when I get closer to retirement
Procrastination is the enemy of retirement planning. The longer you wait, the less time you have to save and invest in retirement accounts. Don’t put this off! Start educating yourself about your options now, even if you’re years away from retirement age.
5. Retirement planning is too complicated
It doesn’t have to be! There are plenty of resources available to help you get started. Talk to your employer about your qualified retirement plan options. Many employers offer 401(k) plans with employer match contributions, which is essentially free money to boost your retirement savings.
There are also online tools and calculators that can help you estimate your retirement expenses and create a personalized plan to reach your financial goals.
6. I need to be a financial whiz to invest for retirement
You don’t have to be a Wall Street wizard to invest for retirement. There are plenty of low-cost mutual funds that offer broad market exposure and diversification across different asset classes. These types of investments are a great way to grow your money over time within your retirement savings plan without having to pick individual stocks or bonds.
7. ‘My investments need to be super safe because I can’t afford to lose money’
While you don’t want to take unnecessary risks, some level of risk is essential for growth to reach your retirement goals. The key is to find the right asset allocation for your risk tolerance and time horizon. The closer you are to retirement, the more conservative your portfolio within your retirement account should be.
8. ‘I can’t afford to save for retirement because I’m in debt’
Focus on paying off high-interest debt first, like credit card debt. However, don’t let student loan debt or a mortgage completely derail your retirement savings plan. Even small contributions can add up over time.
Consider talking to a financial professional about creating a plan to manage your debt and save for retirement simultaneously.
9. ‘I won’t need health insurance in retirement’
Healthcare costs are a major expense in your retirement years. Medicare covers some costs, but it doesn’t cover everything. Factor in the cost of supplemental health insurance, deductibles, and co-pays when planning your retirement budget.
Consider including long-term care insurance (also known as care insurance) in your planning, especially if you have a family history of needing such care.
10. ‘Retirement means I have to stop working altogether’
Retirement doesn’t have to be an all-or-nothing proposition. Many people choose to work part-time in retirement for the extra income, social interaction, and sense of purpose. This can also help supplement your retirement income.
Final Thoughts
Now that you’ve kicked those myths to the curb, it’s time to chart your course to a dream retirement! Don’t wait any longer. Take the first step today. Research retirement savings plans, explore online tools, or chat with a financial advisor. Your future self will thank you!
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
