If you are like 50% of men or 70% of women, then you don’t think you’ve saved enough for retirement. Knowing the facts from the fiction can, hopefully, help you feel more confident about your golden years.
Myth #1 – My taxes will be lower in retirement. Traditionally, that may have been true, but now many people continue to work in various capacities after retiring from their career. This income combined with retirement savings and social security can increase your taxable income. Additionally, many people are much more active early in retirement with travelling and hobbies which can require greater spending. Increased spending may require use of additional retirement savings that is taxed.
Myth #2 – My expenses will go down in retirement. As we discussed previously, early in your retirement can be filled with longed for activities. Travelling, hobbies, etc., can cost much more than you anticipated. As you later age in retirement, medical costs more than likely will be a much larger expense that should not be ignored.
Myth #3 – I can always go back to work. As many as 55% of people retire before they want to. The leading causes are health issues and company downsizing. If you end up having health issues in retirement, your options for gainful employment may be limited or none at all. Technological changes are rapidly changing the workforce. The fact is, your skills may no longer be relevant. The job you used to do may no longer exist or has changed so much, you’ll require significant re-training.
Myth #4 – I’m planning to rely on Social Security. The future of Social Security has been called into question. In fact, the Social Security Administration has said the current system will be depleted by 2035 if changes aren’t made. Washington DC will be forced to save Social Security, but it could totally alter expectations for Social Security income. In order to put the program on solid footing, retirement ages, to receive full benefits, may increase as well as additional taxation on benefits. No matter the outcome, Social Security will still exist, but how big a benefit you’ll receive may surprise you.
Your best option for retirement is to save as much as you can for as long as you can. Understand what your potential expenses will be in retirement and diversify your investment savings. If you would like to learn more about creating a retirement plan you can count on, give us a call.