There’s nothing that’s more important for your future than retirement income planning. When it comes to your retirement plan, you can’t afford to be left in the dark or led astray. A poorly built retirement plan will leave you penniless within years, forcing you to go back to work during the years that should be reserved for living the good life.
Unfortunately, there are many common myths and misconceptions about retirement income planning that are frequently parroted. It’s dangerous to allow yourself to be influenced by these myths because it could lead to you making poor choices that jeopardize your retirement.
At Kennedy Wealth Management, helping you to responsibly prepare for retirement is the name of our game. We understand how difficult the process can be, and we’re ready to help. Through our many years of experience serving the people in the Calabasas area, here are some common retirement planning myths we’ve encountered.
I Won’t be Retired for That Long
On one hand, you should be grateful — as time passes, the average human life expectancy crawls ever upwards. People are living for longer now than they ever have, which means that your retirement period may be much longer than what you were planning for.
Think of this — if you retire at 60 and live to 100, you’ll have 40 years of retirement. That’s just as much as your career! A lot of people plan for retirement and only plan for 10 or 20 years. With retirement planning, it’s always good to err on the side of caution. Better to plan for too much than for too little. Working is the last thing you’ll want to do when you reach ages you never thought were possible.
Cheaper Cost of Living When Retired
One myth that is perpetuated for some reason is the idea that your cost of living will be about 30% cheaper when you’re retired. A lot of retirement planners recommend the “70% rule,” which says to assume that you’ll be spending about 70% of your current income when you’re retired.
This is folly for a few reasons. First of all, there’s no way to know how current things such as taxes and medical expenses will change. Secondly, that’s assuming you’re living an identical lifestyle to the one you have right now, which is highly unlikely.
Most working Americans dream of a retirement age where they can relax, pursue their hobbies, and travel all over the world. Are you any different? Do you assume you’re just going to live the exact same life when you suddenly have all the time in the world to devote to your own pursuits? If the answer is “no,” then you’ll probably be spending more money on pursuits that you’re not actively invested in right now, ultimately driving up the amount you’ll need month to month.
This isn’t a myth that a professional retirement income planner would ever tell you, but it’s one that people tend to convince themselves of on their own volition.
Repeat it with us — it’s never too early to start saving.
That is pretty much the golden rule among all retirement income planners; you should never wait for a certain point to start saving, and in just about every case imaginable, it’s better to start sooner than later.
Ultimately, saving money is less about the money and more about the discipline. Whether you have $10 in your account or $10 million, it’s all about having the willpower to put some of your money away. If you concede that the money was never yours to spend in the first place, it’ll be easier to put it away in savings, whether it’s an investment account, an emergency fund, or in this case, a retirement income plan
There’s a Magic Formula
A lot of people like to believe that there’s a “formula” that works for retirement income planning and that you’ll be good as long as you don’t deviate from it.
Unfortunately, retirement income planning isn’t a paint-by-numbers picture, and if you try to apply an arbitrary set of rules to your own life, you might be in for a nasty surprise when you finally reach retirement and realize that your magic formula led you astray.
If everyone could follow the same formula, there wouldn’t be a need for financial planning advisors like our team at Kennedy Wealth Management. But when it comes down to it, every person’s situation is vastly different and will require special tailoring in their financial plan for their needs. This is why you should see an expert retirement income planner; they will be able to look at the details of your life and recommend the best possible course of action.
You Have to Retire at a Specific Age
This is another myth that’s becoming more untrue with each passing day. A lot of people think of a designated age where they need to retire. In many cases, this arbitrary date ends up with them either too soon or too late. Some people need more years to prepare a solid future for retirement, while others are well-off enough to where they’re wasting precious years of their life working their career when it’s no longer necessary.
The average “go-to” age for retirement is 65. This is because, traditionally, social security and pensions started paying full benefits at this age. However, the landscape of working America is changing, and this is becoming less and less of a standard. Pensions are becoming less common, and the effects of Social Security are becoming less and less impactful.
In this age, it’s expedient for most people to retire when it’s ideal for them, rather than cherry-picking a specific year. This is something you should take into consideration when you’re doing your own planning.
My Pension/Social Security/Medicare Will Take Care Of Things For Me
The sad reality is if you’re confident that [insert program here] will take care of you, you should probably reconsider. First of all, these are programs that are subject to change, and it’s never a good choice to bet on a horse that might not even be racing anymore when your moment comes. Aside from that, the retirement landscape is becoming increasingly more costly and difficult.
Most retirees today can’t survive from these programs alone, and you can bet that in 10 or 20 or 30 years when you retire, they will probably have gotten worse, not better. In short, it’s just not prudent to put all of your eggs in one basket, especially one that could lose significant value as time goes on.
It’s not easy planning for retirement, especially when you’re relying on false information or misleading facts. We hope these myths have helped you to understand what’s what when it comes to retirement planning. Regardless of how educated you are, it’s never a bad idea to consult with professionals for your retirement income planning. At Kennedy Wealth Management, we specialize in helping people in the Calabasas and Woodland Hills area to build the most informed and well-built retirement plans possible. We’ll be able to find the best possible solution for you. Contact us today!