5 Incorrect Assumptions About Retirement

It can be difficult to plan for a period of your life that is very far in the future. After all, almost anything could happen in the meantime! But that’s actually the very reason that you should plan carefully for retirement. Because we can’t always predict all of the variables that will impact your financial wellness, it is better to prepare for the unexpected.

In particular, you might make certain assumptions about your retirement years that simply turn out to be untrue. In fact, we’ve found that the exact opposite of what people plan can often happen. Try not to make any of the following assumptions about your retirement years.

“I can worry about retirement planning later.” No time is too early to start saving. In fact, due to compounding interest, a dollar saved at age 20 will be worth four times as much as a dollar saved at age 55. Earlier preparation is always better, even if you can’t save much.

“I can’t afford to save for retirement.” This is almost always untrue, although different people do enjoy different levels of financial ability to set aside money. When you make planning and saving a top priority, the rest of your priorities will automatically reorganize. So even if you can’t save a lot, focus on saving what you can. Pay yourself first out of every paycheck, and then plan your budget around what’s left.

“I can retire on my inheritance.” Maybe your aging parents have quite the nest egg stashed away now, and you know you have an inheritance coming your way. But we can’t predict how long people will live, and what kind of expenses they will incur at the end of their lives (such as medical bills, nursing home stays, and so on). And if the family fortune rests in investments, remember market swings can drastically impact those.

“I can retire once I’m eligible for Social Security.” Like many retirees before you, you will likely find that Social Security benefits don’t provide for your entire lifestyle. Don’t assume you’ll be ready for retirement at age 66 or 67.

“I will be able to work for a long time.” If you know that your retirement savings are inadequate, you might just assume that you’ll continue to work rather than retire. But did you know that a 2018 Gallup poll found that the average age of retirement in America is just 61 years old? Due to illness and other factors beyond your control, simply working into your seventies might not be a realistic option.

It’s always best to stay grounded, and make plans based on realistic scenarios rather than our hopes and wishes. So let’s schedule an appointment to discuss the likelihood of various factors and how they will combine to impact your finances in the future.