There are myths about retirement everywhere. Advice on internet and other people’s opinions can be detrimental to your retirement goals. So, lets bust a few of these myths.
Myth #1: I’ll Live Off Social Security Income
Living off Social Security will only lead to social insecurity.
The problem is, there’s a huge gap between what future retirees think they’re going to receive from Social Security and what they’re actually going to get.
Right now, retirees receive an average monthly income of $1,657 from Social Security. That’s about $19,900 per year. Not much in today’s economy! And you never know what’s going to happen to social security benefits in the future.
This is barely enough for basic needs for most of us. What about all the things you want to do in retirement? Travel, start a business, fund a hobby? Social Security just isn’t going to cut it. It’s time to take matters into your own hands and start taking steps to secure your retirement future today.
Myth #2: If I Invest Up to My 401(k) Match, I’ll Have Enough to Retire
First of all, if your company offers you a match on your 401(k), take that match! It’s a fantastic place to start investing. But if you really want to build a solid nest egg, you need to invest 15% of your income into retirement. And that means you have to invest beyond the match. This may take some time to work out in your budget but once you’re ready start here:
- If you have a traditional 401(k): Contribute up to your employer’s match in your 401(k), then work with a professional like us here at WWC to pro to invest the rest in a Roth IRA.
- If you have a Roth 401(k): You’re in luck! As long as you have good mutual fund investment options, you can invest your full 15% in your workplace account.
Myth #3: I’ll Work Through Retirement
Whether it’s those crushing health care costs, higher-than-expected living expenses, or simply because they can’t afford to retire, 72% of workers say they plan to work during their retirement years. However, very few retirees say they were actually able to do so.
If you do work in retirement, it should be because you want to—not because you have to. So between now and then, you have to do all you can to set yourself up for a comfortable retirement without needing a job to pay the bills.
Myth #4: Medicare Will Cover My Medical Expenses
There’s a lot of confusion about Medicare and what it can and can’t do. Here is a quick synopsis on what to expect.
Medicare can give you affordable health insurance coverage for doctor visits, medication and hospitalization once you blow the candles out on your 65th birthday cake. That’s the good news.
However, Medicare doesn’t cover the cost of deductibles, copays or any long-term care, like the care you’d receive in a nursing home or assisted living facility that lasts more than 100 days. Those costs are on you.
Myth #5: It’s Too Late for Me to Save for Retirement
No matter how close you are to retiring, there’s still time to grow your retirement savings.
Let’s say you turn 40 this year and bring home around $4,000 a month. By investing 15% of your income until you retire, you could end up with a nest egg worth close to $1.2 million.
And if you’re 50? Contribute 25% of your income toward retirement until you’re 67 and you could have $592,000. Is that better than zero? You bet it is!
No matter how old you are or how much you’ve saved so far, you can still do something. Remember: The more time your money has to grow, the more compound growth can work in your favor.
Myth #6: I Can Do It on My Own
When it comes to investing, it can be tempting to fly solo and guess your way through it but working with an investment professional will give you confidence that you’re heading in the right direction. It’s also building a quality team around you to help you make the right moves.
When you’re doing it alone, emotions can get the best of you and cause you to jump in and out of the market when it goes up or down. That’s no good. A pro can help you focus on the long-term game. Contact us anytime here at WWC to speak to a Fee-Only Certified Financial Planner™.
This commentary was originally posted by Ramsey Solutions, March 4, 2022
Source: https://www.ramseysolutions.com/retirement/want-a-secure-retirement
**Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.