Retiring is something that most of us plan to do someday. But relatively few of us understand what we need to do to retire comfortably. Lots of workers who are approaching retirement age have only a fraction of the money they’ll need to get through the years after they stop working.
Too many people learn the things they need to know about retirement too late. This can result in running out of money when you need it the most, and possibly the loss of non-monetary assets.
Here is some retirement advice on five myths about retirement and why they aren’t accurate.
It’s too early to start saving for retirement. Young workers often believe that they have plenty of time to save up enough money to retire. But what they fail to realize is that starting early can greatly increase the amount they’re able to save. The earlier you start saving, the more time your money will have to earn interest.
It’s too late to start saving for retirement. It’s best to start saving as early as possible, but if you got a late start, there’s still hope. You’ll need to put aside a larger percentage of your income, and in order to do that you’ll need to make some sacrifices. And you probably won’t be able to live as well in retirement as someone who started saving earlier. But it is possible to get together enough money to make it through retirement even if you only have a decade or two to go.
The market is in bad shape, so I should invest conservatively. If your investment portfolio is too conservative, you won’t earn enough to have the money you need when you retire. You’ll need to take on some risk if you want to earn a decent return. Over the decades that your money will be in your retirement fund, you’ll at the very least earn more than you would have by putting it in a savings account.
I can live on my Social Security income. Social Security is a major source of income for many seniors. But it’s highly unlikely that you’ll be able to make ends meet on Social Security alone. Besides, by the time you retire, the government may have cut or even eliminated benefits. Ideally you should save up enough that you’ll be able to make it without relying on Social Security.
I will retire at age 62 (or 65, or 67, or 70). There are age requirements for collecting Social Security and for making withdrawals from some retirement accounts. But there’s no law saying that you have to retire at a specific age, and it’s a good idea to be flexible with your own expectations. Health problems could force you to retire earlier, or unexpected financial problems could necessitate working longer. It’s best to err on the side of caution and try to save up some extra money while you’re able in case things don’t go exactly as planned.
These myths can be detrimental to your retirement saving efforts. By learning the facts about retirement and how to prepare yourself for it, you can ensure that your golden years will not be riddled with financial troubles.
Tags: retirement advice, retirement planning, social security
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on Tuesday, September 13th, 2011 at 7:34 am and is filed under Planning.
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Retiring is something that most of us plan to do someday. But relatively few of us understand what we need to do to retire comfortably. Lots of workers who are approaching retirement age have only a fraction of the money they’ll need to get through the years after they stop working.
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