Retirement is a scary thing for many people. The number one concern is whether a person will have enough money to enjoy his or her retirement years. Business Insider said it best in an Apr. 19, 2017 article: “If your nest egg runs short, it will be far too late for a do-over.” Nonetheless, the article also debunked some common myths. Here’s a recap.
1. Social Security Is Not Going Bankrupt
You hear this one all the time, especially during election years when candidates love to push panic buttons. Contrary to their Chicken Little approach, however, many financial experts agree that Social Security is not going bankrupt. The Social Security Administration has assured Americans that the fund will be intact until 2034, after which it will still have money to pay 75 percent of all retiree benefits.
2. You Don’t Have to Wait Until Retirement to Have Fun
Another myth: You must stash away every penny until retirement. According to financial expert Russ Thornton, this simply isn’t true. No, you can’t go crazy in your younger years and then expect to have plenty of money once it’s time to quit working, but you don’t have to live a life of meagerness and boredom either. With the proper planning and savings approach, you can enjoy life now and later.
3. You Can Withdraw More Than 4 Percent
Many college programs, such as NEC’s online masters in accounting, discuss a 1990s mindset that retirees should only withdraw 4 percent of their total retirement savings annually. Many believe this is the best way to stretch retirement funds. How your money is invested is different from someone else’s, however, and you should evaluate every few years the best percentage to withdraw annually.
4. Retirement Isn’t Cookie-Cutter
One of the biggest perpetuated retirement myths is you will spend the rest of your days lazing on an exotic beach. If that’s what you want to do, fine, but you might decide to open your dream business or work part-time. The point of retirement is to do whatever you want to do. Don’t box yourself in to a preconceived idea. How you retire is as individual as your annual distribution percentage.
5. Your Investment Returns Take Years to Mature
Those retired or close to retirement become obsessed with their investment returns, but Benjamin Brandt, a financial advisor in North Dakota says to be patient. Yes, your returns tell you if your financial plan is working or failing, but long-term financial plans take decades to mature. If you begin your investments early, your returns have the time they need to mature long term.
6. Sweat the Small Stuff
Okay, not literally, but figuratively speaking even the smallest things can help you with your retirement planning, especially if you invest sooner rather than later. Small savings add up over time. An example provided by Jeff Rose, a financial advisor at Good Financial Cents, demonstrates this point: If you invest $200 a month in an account that offers a 7-percent interest rate, you’ll have $218,000 in 30 years.
7. You Might Get Sick
If you look at the pictures and film footage on any advertisement for retirees, every person is active and has a smile on his or her face. Here’s hoping this holds true for you, but you might find yourself in a situation where you need long-term care. Don’t forget to include the possibility of assisted living, convalescent, or home health care into your retirement planning. You might need it.
When you consider the facts, retirement isn’t so scary after all … provided you plan accordingly. This is the most important thing to keep in mind: You can enjoy your Golden Years if you plan for them now. It’s never too late to save for retirement, so get started.